1031 exchange into OR with later personal usage

Log in to Post

Message Board 1031 exchange into OR with later personal usage

This topic contains 3 replies, has 2 voices, and was last updated by Lynn Freer 1 month, 1 week ago.

  • Author
    Posts
  • #151114
    Evonne Winegarner
    Participant

    <span style=”color: #000000; font-family: Calibri;”>Client did a 1031 Exchange from a CA property into a property in OR, deferring $120,000.  The property in OR was a rental from 2011 until it became their personal residence in 2013. Sold in 2018.</span>

    <span style=”color: #000000; font-family: Calibri;”> </span>

    <span style=”color: #000000; font-family: Calibri;”>For Federal purposes, we are comparing the number of days the OR property was a rental vs the total number of days owned (approximately 30% rental).  We are including depreciation recapture as taxable, (Do you agree this would be depreciation from CA and OR properties?) plus 30% of the capital gain as taxable.  The remainder of the gain will be excluded using IRC 121.</span>

    <span style=”color: #000000; font-family: Calibri;”> </span>

    <span style=”color: #000000; font-family: Calibri;”>The main question is, will CA require tax on the entire $120,000 generated in CA and which was originally deferred in the exchange, or is a partial exclusion allowed there as well using IRC 121, even though the primary residence was the OR property?</span>

    Thanks

     

  • #151172
    Lynn Freer
    Participant

    In the final disposition you must report the lesser of the gain deferred or the gain recognized.

  • #151191
    Evonne Winegarner
    Participant

    Thank you.  To clarify, is the “gain realized” the amount before the IRC 121 exclusion from the sale or does it take into account that exclusion?  Appreciate this so much!

  • #151199
    Lynn Freer
    Participant

    I believe we conform to federal so it would be after the 121 exclusion