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I sold a rental house in July and bought another house, but…

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I sold a rental...

I sold a rental house in July and bought another house, but was not able to rent it out due to remodeling issues. Will I have to pay capital gains on the house sold?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

What more do you want to know? I live in Minnesota.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

Sold property for $70,000 and bought another for $135,000.

Submitted: 1 month ago.Category: Tax
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Answered in 3 minutes by:
3/8/2018
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 month ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 934
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 month ago

Dear Customer,

Question, "Will I have to pay capital gains on the house sold?"

Yes. These are two separate transactions. They are not "like kind exchange" which would have to follow rules and regulations and need to have been set up prior to the purchase of the second rental property, before it can qualify for like kind exchange of deferred gain.

Therefore, whether you can rent with remodeling issue does not affect your recognition of rental property sale, unless you had like kind exchange arrangement done prior to purchasing the new rental property.

Enclosed below are IRS website discussion on what like kind exchange procedures are.

https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031

Please feel free to follow up.

Regards,

Fiona

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