It is common for many New England real estate investors to make repairs, updates, and improvements to enhance a relinquished property in preparation for listing with a real estate agent or broker.
Question 1: Can you sell your property to a related party and still qualify for a 1031 tax deferred exchange? Question 2: Can you buy your replacement property from a related party and still qualify for a 1031?
When an asset is sold for more than its original cost, there is gain which the IRS will tax at the “capital gains tax rate”. The amount of capital gain is calculated by taking the selling price of the asset minus its “adjusted basis”
Exchanges may be fully tax-deferred or partially tax-deferred and partially taxable. An exchange will be partially taxable if the taxpayer receives net non-like kind property, (boot) in the exchange.