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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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Sale and replacement of an unimproved residential lot. LOT

Customer Question

Sale and replacement of an unimproved residential lot.
LOT 1 Purchased for $52,000 in 1996.
Sold for $183,000 in 2015.
LOT 2 Purchased for $185,000 in 2009 with bank loan.
Loan paid in full in 2015 three days after sale of LOT 1.
Are these transactions subject to capital gains tax under IRS code 1031?
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.
The Lot 1 transaction is subject to Capital gains.The loan payoff from the proceeds of Lot 1 paying off Lot 2's bank loan would not qualify for any favorable tax treatment under IRC 1031 or any other code section.