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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2608
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Exchange of land propertyI am considering the

Customer Question

Exchange of land for income property
I am considering the sale of some vacant land. The property has been used as farm land and I rented a mobile home on it for a short time. I have to own it for 15 years, and a home was on the property for the first five years. The home was demolished due to a land slide, and I received a payment for the "heated space" of the home from FEMA. .
I want to know what I can claim as the basis in this house. My interest payments were not used on my taxes after the house was destroyed. If I build and sell the profit will be about  $1,000,000, and most of this is profit due to the "heated space" purchase. The net sale would be $1,600,000. If I sell just the land, the profit would be about the same, however, it would probably take longer to sell.
My plan would be to buy a rental income property. I would like to pay off all or part of a $600,000 loan because the loan is a “hard money loan."
My questions:
What is qualified for deduction from the sale?
If I do a like kind exchange can I use some of the proceeds to pay off the mortgage?
If I do a like kind exchange for a home can it be a home that has not been an income property?
If I want, eventually to use the owner sale exemption of $500,000 is this possible?
Do you have an alternative suggestion?
Submitted: 2 years ago.
Category: Finance
Expert:  PDtax replied 2 years ago.
Welcome to the site. I'm PDtax, and saw your questions.
There is a lot here to explain, in both like kind exchanges, principal residence requirements, and planning for the sale of the property.
I can assist, but will ask for a price bump to cover all you ask for.
Accept, and we can work on this tomorrow.