Real Estate Law

Have real estate law questions? Ask a real estate lawyer.

Ask a Lawyer,
Get an Answer ASAP!

This is about real estate 1031 tax law. I recently sold a…

Customer Question
This is about real estate...
This is about real estate 1031 tax law.
I recently sold a condo, the proceed is going into 1031 exchange to buy a new investment property.
Now I am thinking about selling the 2nd condo and use its proceed to put into the same new property as 1031 exchange as well.
However, the new property's escrow might close before i sell the 2nd condo.
Can I use the proceed from the 2nd sale to pay off the loan on this new investment property and still qualify for 1031?
Or how to tie the second sale proceed with the first sale proceed so they both are used on the same new investment property as IRS allows?
Submitted: 2 years ago.Category: Real Estate Law
Show More
Show Less
Ask Your Own Real Estate Law Question
Answered in 45 minutes by:
1/30/2016
Real Estate Lawyer: legalgems, Arbitrator replied 2 years ago
legalgems
legalgems, Arbitrator
Category: Real Estate Law
Satisfied Customers: 13,858
Experience: Just Answer consultant at Self employed
Verified

No, to qualify for a 1031 exchange, one must sell real estate and acquire other replacement real estate. The pay down or pay off of debt on another property, whether your principal residence or investment property, is not an acquisition of real estate and will not qualify as a tax deferred exchange under Section 1031 of the Internal Revenue Code.

Unfortunately it is not a like kind exchange.

I am including some links for your reference that support this:

https://www.irs.gov/uac/Like-Kind-Exchanges-Under-IRC-Code-Section-1031

https://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Sale-or-Trade-of-Business,-Depreciation,-Rentals/Sales,-Trades,-Exchanges/Sales,-Trades,-Exchanges-2

https://www.irs.gov/publications/p544/ch01.html#en_US_2014_publink100072371

This does a good job of explaining it:

since the new investment property is already acquired, it fails the requirements for the 1031.

Thank you for using Just Answer.
I hope the information provided was useful.

Here is a link to the bar association's legal referral site:
http://apps.americanbar.org/legalservices/lris/directory/

Should you have further questions please post here; otherwise kindly

--- Rate Positively---
so the site credits me for assisting you.

Thank you and take care!

Ask Your Own Real Estate Law Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a real estate lawyerLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask legalgems Your Own Question
legalgems
legalgems
legalgems, Arbitrator
Category: Real Estate Law
Satisfied Customers: 13,858
13,858 Satisfied Customers
Experience: Just Answer consultant at Self employed

legalgems is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

< Previous | Next >

Meet the Experts:

Barrister

Barrister

Lawyer

12,142 satisfied customers

17 years real estate, Realtor. Landlord 26 years

Infolawyer

Infolawyer

Lawyer

8,377 satisfied customers

Experienced lawyer

Ray

Ray

Lawyer

8,253 satisfied customers

Texas Attorney for 30 years dealing in real estate

LawTalk

LawTalk

Attorney

6,208 satisfied customers

I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.

Dimitry Esquire

Dimitry Esquire

Attorney

5,526 satisfied customers

JA Mentor, multiple jurisdictions, specialize in business/contract disputes, estate creation & admin

Ely

Ely

Counselor at Law

4,998 satisfied customers

Qualified attorney in private practice including business, family, criminal, and real estate issues.

P. Simmons

P. Simmons

Lawyer

3,572 satisfied customers

12+ yrs. of experience including real estate law.

< Previous | Next >

Related Real Estate Law Questions
Selling a rental property (once our primary residence) we've
Selling a rental property (once our primary residence) we've have for 26 years. Want to take money from sales and pay off another rental property. Do we have to pay capital gains tax. … read more
Ray
Ray
Lawyer
Doctoral Degree
8,253 satisfied customers
My 80 year old mother owns a second home titled in a
My 80 year old mother owns a second home titled in a revocable trust, which she is selling. If she does not reinvest the proceeds in another home, is there a tax impact? … read more
DamienJD
DamienJD
Attorney
Doctoral Degree
5,321 satisfied customers
We have a closing scheduled TUESDAY July 19th. We are the
Hi We have a closing scheduled for this TUESDAY July 19th. We are the exchangor. The buyer now wants us to take back financing in order to make the deal work. We are willing to do this but we want to … read more
Ray
Ray
Lawyer
Doctoral Degree
8,253 satisfied customers
We inherited a tri-plex in CA. In 2010. It was appraised at
We inherited a tri-plex in CA. In 2010. It was appraised at the time for $750,000. We have just sold it for $1,443,000. We would like to do a 1031 exchange on a small amount of approx. $175,000. It's … read more
Barrister
Barrister
Lawyer
Doctoral Degree
12,142 satisfied customers
I have sold my apt bldg. and want to purchase another investment
I have sold my apt bldg. and want to purchase another investment property. How do I avoid paying Capital Gains?… read more
Barrister
Barrister
Lawyer
Doctoral Degree
12,142 satisfied customers
Is it legal to invest 900,000.00 in a business using
is it legal for me to invest 900,000.00 in a business using the 1031 tax deferral and loan my buddy 300,000.00 at the time and just make one transaction of 1.2 million and put the whole 1.2 million in… read more
PaulmoJD
PaulmoJD
Attorney At Law
Doctoral Degree
106 satisfied customers
I have a question about a 1031 exchange. We have a 2nd property
I have a question about a 1031 exchange. We have a 2nd property in a mountain resort area, owned for the last 10 years. Of those years we have claimed rental income for probably 7 of the 10 years. Mos… read more
Attorney 1
Attorney 1
2,703 satisfied customers
A friend is selling a rental property at a profit and wants
A friend is selling a rental property at a profit and wants to put the proceeds into another larger property. I told him about a 1031 exchange and that he needed to talk to the brokers on both transac… read more
Law Pro
Law Pro
Doctoral Degree
19,000 satisfied customers
I have someone interested in buying our business property to
I have someone interested in buying our business property to be a "1041 tax exchange" What is this? How does it work? What are the $ limits? Thank you, Michael… read more
P. Simmons
P. Simmons
Lawyer
Doctoral Degree
3,572 satisfied customers
How can I structure a buying plan for my property [commercial]
How can I structure a buying plan for my property [commercial] in KY so that my current renters can buy the property and so I don't get "killied" by capital gains - big banks and big industry pay no t… read more
TaxAttorneytoHelp
TaxAttorneytoHelp
Owner
Doctoral Degree
2,542 satisfied customers
I built a home in Deatsville Alabama and had to leave it when
I built a home in Deatsville Alabama and had to leave it when the Air Force moved me overseas. I converted it to a rental property and still own the home as a rental. I am interested in selling the ho… read more
Law Pro
Law Pro
Doctoral Degree
19,000 satisfied customers
I lent a $80,000. on his house. He didnt pay me the monthly
I lent a xxx $80,000. on his house. He didn't pay me the monthly mortgage so I foreclosed and assumed the 1st loan of $112,000. Then I quitclaimed the property to my son and asked him to pay me back m… read more
Law Pro
Law Pro
Doctoral Degree
19,000 satisfied customers
I plan to sell a house on Lake Hartwell that I built myself
I plan to sell a house on Lake Hartwell that I built myself 25 years ago. It is not my primary residence. With the considerable appreciation, capital gains tax could be a big hit. Is there a way I can… read more
Law Pro
Law Pro
Doctoral Degree
19,000 satisfied customers
Considering a 1031 exchange: 1. the sale price of 695K means
Considering a 1031 exchange: 1. the sale price of 695K means i would have a capital gains of approximately 500K 2. the cash out of the deal would be approx 310K 3. not clear how this works. so one alt… read more
Roger
Roger
Litigation Attorney
Doctoral Degree
26,939 satisfied customers
1031 Exchange what are the penalties for doing a 1031 and not
1031 Exchange what are the penalties for doing a 1031 and not following through on using it as an investment? Does IRS go back to the first proeprty in teh exchange and compute taxes due??… read more
Roger
Roger
Litigation Attorney
Doctoral Degree
26,939 satisfied customers
I have some appartments that I will be selling this year and
I have some appartments that I will be selling this year and will be taking advantage of a 1031 exchange. My question is -- There is a group called Reality Income on the New York stock exchange that o… read more
Barrister
Barrister
Lawyer
Doctoral Degree
12,142 satisfied customers
Interested in a 1031 exchange on investment real estate. I
Interested in a 1031 exchange on investment real estate. I know that there is a 180 day provision. I have been informed that the new property must be actively listed for rental for at least 2 years. I… read more
Roger
Roger
Litigation Attorney
Doctoral Degree
26,939 satisfied customers
What is involved in trading real estate We have a house in
What is involved in trading real estate? We have a house in Berkshire County we are considering trading for a house in Kentucky. We do not know how this works in order to protect our interests. How wo… read more
Law Pro
Law Pro
Doctoral Degree
19,000 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x