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HI, I was wondering if someone has been divorced for 5 years

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HI, I was wondering if someone...
HI,

I was wondering if someone has been divorced for 5 years and wants to do a 1041 Exchange on a rental property he sold in Hawaii with a property he wants to purchase in Marina Del Rey does the property he purchases in Marina Del Rey have to be a rental property so he does not have a capital gains tax and if so how long does it have to be a rental property before it can be Owner Occupied?
Submitted: 4 years ago.Category: Tax
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Answered in 2 minutes by:
6/5/2013
Tax Professional: Megan C, Certified Public Accountant (CPA) replied 4 years ago
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Verified

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

In order to do a 1031 exchange, there has to be a simultaneous swap for one property for another

MyVirtualCPA :

If the property has already been sold, then you can't do a 1031 exchange.

MyVirtualCPA :

Have you actually sold the property in Hawaii?

JACUSTOMER-2qplvp4g- :

I am asking for a friend but yes he closed on Monday and wants to write an Offer on a property in Marina Del Rey. He is concerned that he has to keep Marina Del Rey as a rental property instead of Owner Occupied or pay capital gains tax. He wants to do a 1041 Exchange because he is divorced. So you are saying he cannot roll the gains into the purchase of another property and not pay capital gains tax because his property already sold?

MyVirtualCPA :

He cannot do a 1031 exchange

MyVirtualCPA :

The 1031 exchange is structured, and it would have to be a simultaneous swap of property, or near simultaneous

MyVirtualCPA :

and would have to go through a qualified intermediary

MyVirtualCPA :

So, unless he lived in the Hawaii property 2 out of 5 years he will owe capital gains tax on this transaction

MyVirtualCPA :

There is no provision that allows for reinvestment of gains.

MyVirtualCPA :

Is there anything else that I can help you with?

MyVirtualCPA :

If not, please rate my response as "excellent" so that I may receive credit for assisting you today.

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Tax Professional: Megan C, Certified Public Accountant (CPA) replied 4 years ago
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer
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Megan C
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
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