Confused about tax-deferred exchange

No replacement property, no deal

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

DEAR BOB: I own a two-family rental duplex and a single-family rental house. I want to sell the duplex and pay off some of the mortgage balance on the rental house. Under Internal Revenue Code 1031, can I invest the proceeds of the rental duplex sale to pay down the mortgage on the rental house without owing capital gain tax? --Simon B. DEAR SIMON: No. Sale of the rental duplex and using the sales proceeds to pay down the mortgage balance on your already-owned rental house will not qualify as a tax-deferred exchange. Purchase Bob Bruss reports online. To make an IRC 1031 tax-deferred trade, you must sell property held for investment or use in a trade or business, such as that rental duplex, and acquire a replacement investment or business property of equal or greater cost within the specified time limits. Your tax adviser has further details. CAN FOREIGN OWNER QUALIFY FOR $250,000 HOME-SALE TAX EXEMPTION? DEAR BOB: My older sister owns a house in California. But she has German cit...