Like a lot in Washington, 1031 exchanges are being affected by the new tax laws. David Moore and his fellow professionals at Equity Advantage are committed to keeping you up to date: in this video he explains changes to real property rules.
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Today we’re talking with David Moore, co founder of Equity Advantage, a firm that specializes in tax deferred investments, in particular, IRS section 1031 exchanges.
David, what are some other changes to real property for 1031 exchanges?
David Moore: Well, as we discussed previously, we lost the personal property. But on the plus side, we have that section 1031, which we’re very very happy about for real property. We’ve got certain situations where it looks like it’s gonna be possible now, which is gonna make my life a lot easier. But the other thing I think is probably more pertinent to a lot of people is section 121. It looked like in both the House and Senate’s proposed bill, we would have an extension of the required hold periods for section 121 application, the universe exclusion on a home sale. And fortunately, those extended periods did not pass.
I just want to once again stress that the proposed changes on holding for 121 did not go through, so we still have the 2 out of 5 rule we’ve always had for that. And that’s definitely something we can thank the National Association Realtors for lobbying hard to get maintained.
David, you mentioned this creates some opportunities?
David Moore: Certainly does. Something people don’t think about very often is you can have a single property that could be both 1031 and 121. You have to look at it and understand how to best use both tax codes. And keep this in mind too, you can convert an investment property, 1031 property, in a primary residence. You can go from primary residence, section 121 into 1031. And there’s actually reasons to do both things. When section 121 came into play in the late nineties, we had a situation where the 250 and 500 exclusions that it has were very substantial in those days. And today’s home values have made those numbers look very small for a lot of people. So, we’re always in a situation where we’ve gotta look at something, understand what it is today, and really what you want it to be in two or five or ten years, and how we can keep your money yours, working for you productively.
Thank you David. Listeners may call 503-635-1031, or can visit 1031exchange.com for more information.
The rules around 1031 exchanges were never simple, but with the new tax laws things are changing fast. There have already been significant changes to rules on both personal property and real property. Make sure you stay up-to-date; and remember, you can always pick up the phone and call for the latest!