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levr, Tax Advisor
Category: Capital Gains and Losses
Satisfied Customers: 28081
Experience:  Working for a large tax preparation service
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Would my brother lose his capital Gains tax credit by purchasing

Customer Question

Would my brother lose his capital Gains tax credit by purchasing my building
Submitted: 6 months ago.
Category: Capital Gains and Losses
Expert:  levr replied 6 months ago.
As the best of my knowledge - there is no federal capital Gains tax credit...But you might meant something different?Can you clarify which exactly credit did you meant andif you provide some details about your situation - that might be also helpful.
Customer: replied 6 months ago.
Brother sold property made a profit has 4years to reinvest to offset Was told that he could not receive it if he bought from his family or me is this true and is there exception
Expert:  levr replied 6 months ago.
Is that a personal property or a business property or an investment property ?In which state your brother lives and in which state the property is located?
Expert:  levr replied 5 months ago.
Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.The exchange can include like-kind property exclusively or it can include like-kind property along with cash, liabilities and property that are not like-kind. If you receive cash, relief from debt, or property that is not like-kind, however, you may trigger some taxable gain in the year of the exchange. There can be both deferred and recognized gain in the same transaction when a taxpayer exchanges for like-kind property of lesser value..What are the time limits to complete a Section 1031 Deferred Like-Kind Exchange?While a like-kind exchange does not have to be a simultaneous swap of properties, you must meet two time limits or the entire gain will be taxable. These limits cannot be extended for any circumstance or hardship except in the case of presidentially declared disasters. The first limit is that you have 45 days from the date you sell the relinquished property to identify potential replacement properties. The identification must be in writing, signed by you and delivered to a person involved in the exchange like the seller of the replacement property or the qualified intermediary. However, notice to your attorney, real estate agent, accountant or similar persons acting as your agent is not sufficient. Replacement properties must be clearly described in the written identification. In the case of real estate, this means a legal description, street address or distinguishable name. Follow the IRS guidelines for the maximum number and value of properties that can be identified. The second limit is that the replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier. The replacement property received must be substantially the same as property identified within the 45-day limit described above.Questions?

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