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Lane
Lane, JD, CFP, MBA, CRPS
Category: Capital Gains and Losses
Satisfied Customers: 10163
Experience:  Have been providing Financial and Tax advice for 30 years.Concentration in Corporations, Estate, Income Tax and Business Planning
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I sold a rental commercial building in december of 2015. I

Customer Question

i sold a rental commercial building in december of 2015. I just closed on a new commercial property in september 2016. I had a loss on the sale of my property in 2015 but because of allowable depreciation it says i have a gain of 60k. is there any way to offset this becuase of the new purchase?
JA: I love the idea of making big money with investments, but there are so many things that could go wrong. The Accountant will be able to help you. Is there anything else important you think the Accountant should know?
Customer: i've heard of like kind exchanges but don't know how they work or if they could help me
Submitted: 1 month ago.
Category: Capital Gains and Losses
Expert:  Lane replied 1 month ago.

Hi, My name's Lane. I can help.

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What you're referencing is a 1031 exchange (which allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes).

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IRC Section 1031 (a)(1) states: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment"

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The problem here, however. may be the very specific PROCESS for doing the 1031 exchange.

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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.

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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.

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There must BE a qualified intermediary, so that you nevef take constructive receipt of any sales proceeds

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And finally, 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.

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I'm so sorry, but it sounds like you may be a little late in the game to do this. What you might want to do is contact one of the Quaalified Intermediary companies and provide your specifics

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e.g., http://www.exeter1031.com/ (I have no association)

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Expert:  Lane replied 1 month ago.

Here's a site where you can look for QI's and even filter by territory: https://www.realized1031.com/qualified-intermediaries

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Please let me know if you have any questions at all, before rating me.

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And if you DON'T have other questions Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …would be appreciated!

Otherwise I receive no compensation for the work.

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Thank you,

Lane

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I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, a Masters Degree, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Expert:  Lane replied 1 month ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

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But again, let me know if you need more on this.

Lane

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