How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13323
Experience:  15years with H & R Block. Divisional leader, Instructor
14155347
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I sold my 1031 exchange at a loss. No reinvesting, will I

Customer Question

I sold my 1031 exchange at a loss . No reinvesting , will I still have to pay the deferred taxes from the 10 year old 1031 exchange
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
I sold for 310 with a gain of 137 reinvested 106 in a 1031 exchange for a property of 240. Now I just sold the property with many loses for 195. I got 31k in hand.
Expert:  Robin D. replied 1 year ago.

Hello

When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.

The basis of property acquired in a Section 1031 exchange is the basis of the property given up with some adjustments. This transfer of basis from the relinquished to the replacement property preserves the deferred gain for later recognition.

In short yes, you still must report the gain from the 1031 now that you have sold the replacement property.

Customer: replied 1 year ago.
thank you . I still have to pay these deferred taxes even though I have no gains on the sale of this property? I am writing off many loses. I gained nothing but still have to pay the deferred on the old property ? correct?
Expert:  Robin D. replied 1 year ago.

Yes, the tax on the original was only deferred not voided or discarded. You trigger all of the deferred gain and depreciation recapture upon sale.

If the property has dropped enough in value (i.e. more than what the deferred gain was), then your deferred capital gain has been wiped out and you would have no tax

Expert:  Robin D. replied 1 year ago.

Please advise if you need more information or rating in a positive way is acceptable.

When you actively click on a rating and click submit, that lets Just Answer know you were assisted and credits me for the time.

Expert:  Robin D. replied 12 months ago.

Did you need to post again before you rate?

Related Tax Questions