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Selling a rental property and using it in an 1031 exchange…

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Selling a rental property and...
Selling a rental property and using it in an 1031 exchange to buy house for my sons family to live in. They will qualify for the loan and go on title.Question is the property still a rental property as son is going to live in it and going on title. 1% interest difference in mortgage.How does it effect them when go to sell tax wise. I eventually want to gift to them.
Submitted: 4 months ago.Category: Tax
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3/12/2018
Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
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My name is***** will assist you today.

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

If you are transferring ownership, then you would have to currently account for and pay taxes on the amount transferred to your son.

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

The house would be considered owner occupied, which may make your 1031 exchange invalid, in my opinion.

You are able to gift the home outright to him and use a life time exclusion, which has been increased to $11 million before any estate tax would be due. When you gift property, the receiver of the gift also receives the gifters cost basis.

Please let me know your follow up questions or concerns.

Thank you!

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

Please let me know if this has answered your question or if you have any additional questions.

When you have no further questions a positive rating of 5 stars is much appreciated.

Thank you!

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