Options available for rollover of capital gains? - Posted by Scott

Posted by Dave T on May 21, 1999 at 17:43:36:

You are perhaps alluding to a tax-deferred exchange, sometimes called a 1031 exchange. Section 1031 of the IRS code provides specific rules for replacing an investment property with a like-kind investment property and deferring the capital gains.

Once you have replaced your investment property with another investment property, the IRS does allow you to convert your investment rental property to your primary residence. Of course, you must operate the replacement property as a rental for some reasonable period of time before conversion to primary residence. There is no specific definition of a “reasonable period” but current thinking suggests 24 months. If you convert too soon, the IRS can invalidate your conversion and force you to recognize the capital gain on the sale of your investment property.

After you convert your rental to a primary residence, then all future capital gains qualify for exclusion under the 2 year ownership and use rules.

Options available for rollover of capital gains? - Posted by Scott

Posted by Scott on May 21, 1999 at 12:59:23:

I have an investment property that I’ve owned for over 3 yrs but unfortunately did not live in at all. I am considering selling it as the regional market has skyrocketed.

I am vagely aware of the option to rollover the capital gain to another similar/investment property within 3 months so as to avoid paying tax now. Are there any other options available? Can I put the gain into another house to be my primary residence?

Thanks for any help/advice