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An involuntary conversion occurs when your property is destroyed, stolen, condemned, or disposed of under the threat of condemnation and you receive other property or money in payment, such as insurance or a condemnation award. Involuntary conversions are also called involuntary exchanges. The taxable "gain" from a condemnation of property is the amount realized (in your case, $100,000) MINUS the adjusted basis of the property, i.e., generally what you paid for the property. In other words, you will not pay capital gains tax on the amount you receive ($100,000).
Election to postpone gain
Report your election to postpone reporting your gain, along with all necessary details, on a statement attached to your return for the tax year in which you realize the gain.
To postpone reporting your gain from a condemnation, you must buy replacement property within a certain period of time. This is the replacement period.
The replacement period generally ends 2 years after the end of the first tax year in which any part of the gain on the condemnation is realized.
The 1033 election requires a taxpayer (either an individual or a business) to make a timely election and a timely replacement to defer gain on property following an involuntary conversion.
If this is your home, if you meet the IRS requirements of owning and using the property as your main home for a period totaling 2 years out of the past 5, you may qualify to exclude up to $250,000 of the gain from your income or $500,000 if you file a joint return with your spouse.
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