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1031 Exchange

February 09, 2017 • TaxApprentice • Log In to Post Comments

Dear Tax Professionals:

I have a client who is thinking of doing a 1031 exchange relinquishing his rental property for a replacement investment that will be land which he plans on developing.  Since the relinguishing property is a section 1250 property, will he fall under the recapture pitfalls and need to report the recapture as his taxable gains?  It is my understanding that generally the replacement property must contain the same value of section 1250 property as the relinquished property or the taxpayer will recapture the difference at ordinary income tax rates.  Please advise.  Will he still need to recapture if he plans on turning the replacement property into a section 1250 property?


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