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Old 05-22-2019, 01:28 PM   #1
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1031 Exchange (Tax Deferment)

So my renters in my home are moving out so I have decided to sell the house. I know because I haven't lived in the house that there will be a huge chunk that comes out for taxes. My question is, once I sell the house, if I purchase a fifth wheel using that money in the allotted time frame, can I use the 1031 exchange to defer the tax?

Thanks
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Old 05-22-2019, 01:50 PM   #2
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Very good question. I would like to see the answer.
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Old 05-22-2019, 02:12 PM   #3
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An RV or a boat used to qualify for the mortgahe tax deduction under IRS rules, so I dont see why not. I think it would have to be commercial, generating income though to qualify for a 1031 exchange. All u ou are doing with a 1031 is kicking the can down the road by rolling your gain into a new, more expensive rental property.
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Old 05-22-2019, 02:40 PM   #4
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Do not expect to get legal or tax guestions answered correctly on any Internet forum. Ask a CPA or Tax Lawyer. Most will give you a free initial consultation.
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Old 05-22-2019, 03:11 PM   #5
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I have done a 1031 before, but get the advice of a 1031 exchange expert. Not all CPA's will be familiar with a 1031.
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Old 05-22-2019, 03:44 PM   #6
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Nope!
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Old 05-22-2019, 03:49 PM   #7
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Quote:
Originally Posted by 2MilitaryVet View Post
So my renters in my home are moving out so I have decided to sell the house. I know because I haven't lived in the house that there will be a huge chunk that comes out for taxes. My question is, once I sell the house, if I purchase a fifth wheel using that money in the allotted time frame, can I use the 1031 exchange to defer the tax?

Thanks
1031 exchange.........Like for like, Only Rental for Rental
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Old 05-22-2019, 08:39 PM   #8
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No, an RV won't qualify for a 1031. 1031's are complicated and you want to talk with an expert before you commit to anything. You could probably purchase a piece of investment property that you could park the RV on using a 1031. We also wouldn't mind selling some of our rental property, but after looking at all the tax liabilities, we are planning to die and leave them to our kids who can use current value as their basis. At least I think that's pretty much what the CPA told us. How long has the house been rented? You might still qualify for a homeowners exemption. Have you depreciated it while it was being rented or are you just expecting capital gains? As you can see it is complicated. You need to consult a competent tax advisor before making a decision.
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Old 05-22-2019, 08:41 PM   #9
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1031 exchange.........Like for like, Only Rental for Rental
This is the general rule. Like for like. House =/= RV! One is real property, one is a vehicle. 99.7865% positive you cannot do this.
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Old 05-23-2019, 05:46 AM   #10
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In 2000 we bought the house next door when the guy passed away. We refurbished it, rented it out for almost 2 years, then the mother in law moved at age 77. She passed away in 2017. She did not pay us any rent, just her utilities.
We were going to sell but our tax guy said we would pay capital gains taxes of almost 15 to 20%, since it was considered investment. Only exception was if we lived it in for 2 years could we avoid the tax.

We did inquire about what you are asking and at that time he said, No it needed to be rolled over into another real estate property. But you need to check because with the new tax laws you knows what could had changed.
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Old 05-23-2019, 06:25 AM   #11
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A 1031 exchange is called a “Like-Kind Exchange” for a good reason. Investment property must only be swapped for other investment property. Conceivably you could get a like kind treatment by renting out your new RV but the probability of that being challenged is very high unless you plan on never using the RV personally and even then it may not fly.

To add to the likelihood that a 1031 would not work you have the new issue of the changes that are in the new tax law regarding 1031’s. Even though some may refer to an RV as an investment, there are very few who make money on an RV.
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Old 05-24-2019, 09:57 AM   #12
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Hi ! Welcome to IRV2! We're sure glad you joined the gang!

Noticed you are new on IRV2 and wanted to say hello!

Good luck, happy trails, and God bless!
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