Apartment building owners seek fast way to save on taxes

Five-year rule applies to house acquired in exchange

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DEAR BOB: I know you answered a similar question several months ago, but I don't recall the answer. I own a six-unit apartment building, in which my wife and I have a large profit. If we make an outright sale, we will owe a huge capital gain tax. My wife remembered an item in your column saying we could make a tax-deferred trade of the apartment building for our "ultimate dream home," and then we could sell the house in a few years to claim $500,000 tax-free profits. Is there a minimum holding time for the house? --Harold J. DEAR HAROLD: Yes. You first can make an Internal Revenue Code 1031(a)(3) Starker tax-deferred exchange of your apartment building for your dream home. Purchase Bob Bruss reports online. However, please remember the basic Starker exchange rules: 1) you must trade equal or up in both price and equity, 2) you can't take any taxable "boot" such as cash or net mortgage relief out of the trade, 3) sales proceeds from the apartment building must be held by a qualified th...