Capital Gains and Losses

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SOLD OFFICE BLG DEC 2016 ON 1031 EXCHANGE. BOUGHT TWO CONDOS…

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SOLD OFFICE BLG DEC...

SOLD OFFICE BLG DEC 2016 ON 1031 EXCHANGE. BOUGHT TWO CONDOS IN MID JAN 2017. GOT PROP. MGR AND TENANTS.FULL INTENTION TO KEEP A YR OR TWO. REAL ESTATE MARKET SEEMS TO BE GETTING UNSTABLE. CONDOS GOING UP IN VALUE TOO FAST. I WANT TO CASH OUT ON CONDOS THIS YEAR. I AM WILLING TO PAY CAPITAL GAIN. IS THERE ANY OTHER PENALTIES FOR THIS EARLY SELL. HAVE NOT LISTED YET. ALL TRANSACTION WERE CASH.

Accountant's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

SACRAMENTO CALIFORNIA

Accountant's Assistant: Has any paperwork been filed?

DID MY TAXES AND MAILED THEM IN.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

I WENT THRU A FACILATOR AND CPA.EVERYTHING CHECKED OUT SO FINISHED MY 2016 TAXES.

Submitted: 11 months ago.Category: Capital Gains and Losses
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Answered in 29 minutes by:
9/15/2017
Tax Expert: Mark Taylor, Certified Public Accountant replied 11 months ago
Mark Taylor
Mark Taylor, Certified Public Accountant
Category: Capital Gains and Losses
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Hi, my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

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Tax Expert: Mark Taylor, Certified Public Accountant replied 11 months ago

The Department of the Treasury has many regulations and numerous rulings that make it very clear that you must have the intent to hold your 1031 Exchange property for rental, investment or use in your trade or business, they fail to define exactly how long or over what period of time you need to hold your relinquished properties or replacement properties in order to qualify for a 1031 Exchange pursuant to Section 1031 of the Internal Revenue Code or Section 1.1031 of the Treasury Regulations.

Intent would be determined by your actions. You bought the Condos, hired a property manager, and had tenants. You intent seems to be very clear. Due to changing conditions in the market you decided to change your intent and sell. You would have some capital gains and depreciation recapture to pay taxes on but there would not be any penalties.

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