Exchanging Thoughts

The Interplay of 1031 and Personal Residence Sales

Posted by Paul G. Neiffer, CPA on Wed, Jul 15, 2020

Many investors sell investment property that includes their personal residence. We see this in many farm operations where the house is located on the farm. Also, many city dwellers recently converted their personal residence into a combination of rental property and their home.

Read More

Topics: section 121 exclusion, section 1031, 1031 Exchange, personal residence, rental property

Homeowners May Never Pay Taxes on the Sale of their Primary Residence

Posted by Margo McDonnell on Wed, Sep 19, 2012

This Wealth Building Wednesday discusses the exclusion allowed when selling your home.  Homeowners who have resided in their residence for at least two of the last five years may be eligible for the Principal Residence Exclusion allowed under section 121 of the Internal Revenue Code. Single taxpayers are entitled to a $250,000 exclusion and married taxpayers filing jointly are entitled to a $500,000 exclusion. An exclusion allows you to have a gain on the sale of your primary residence up to the maximum limit without having to pay capital gain taxes. Any gain over and above these exclusion limits is taxable. 

Read More

Topics: section 121 exclusion

1031 Exchanges & Mixed-Use Properties

Posted by Margo McDonnell on Mon, Jul 23, 2012

Properties involving mixed uses (combining personal and business use) can be exchanged under section 1031.  The portion of the property used for business use will qualify for tax deferral treatment under Section 1031.  Depending on its use, the portion of the property used for personal use may qualify for the $250,000 ($500,000, if married filing jointly) primary residence exemption (under Section 121).  Additionally, you can acquire a property that would have mixed uses.  Some examples of properties that may have mixed uses are owner occupied duplexes, bed & breakfasts and farms.

Read More

Topics: section 121 exclusion, mixed-use properties, section 1031, 1031 Exchange