Re: Questions about 1031 Tax Free Exchanges… - Posted by Dave T
Posted by Dave T on December 04, 2000 at 22:55:23:
For most of us, the sale of our personal residence is already a TAX FREE transaction, subject to the $250K ($500K MFJ) capital gains exclusion. Usually there is no need to look for complicated tax avoidance strategies when selling your personal residence.
As David Krulac pointed out below, 1031 tax treatment does not apply to your personal residence. I would like to clarify, however, that a 1031 exchange is not tax free. I know that “tax free exchange” is a popular term for a 1031 like-kind exchange, but taxes on an exchange are only DEFERRED – not eliminated.
In your situation, let’s assume that your potential buyer is really interested in buying your home if you would be interested in buying his. In this context, you will be TRADING up, he will be trading down. You each get new mortgages to finance your respective legs of the transaction. I don’t believe that the use of the term TRADE should be construed to mean a 1031 transaction. Now, I could be wrong here because I am not able to ask the other party in this deal just what is meant by the term TRADE.