Tax info please

[RMK7SledHead]

Any accountants on here that can tell me if the following is possible? :

Sell 170 acres of farm land (no house on the land) and pay off the note on it. Have $400k cash after the deal is all done. Can this money be used to buy a house and thereby not have to pay capital gains on it? Or can you only roll money like that from one house to another?

 

[AZ800]

I am not a CPA, but I am about 90% sure you cannot roll your profit into a house w/o paying capital gains. The basis of getting out of paying capital gains is living in the residence sold for at least 2 years out of the 5 yrs immediately prior to the sale, as your primary residence.
You are however allowed to have 2 "primary" residences (with a couple strings attached).
Suggestion, if it's not already sold, roll an old tornado magnet up on the property (cheap way to get a primary home), and make it your "primary" residence for the next 2 years, then sell.

 

[racingpit]

Taxes suck!

 

[ruffryder]

Any accountants on here that can tell me if the following is possible? :

Sell 170 acres of farm land (no house on the land) and pay off the note on it. Have $400k cash after the deal is all done. Can this money be used to buy a house and thereby not have to pay capital gains on it? Or can you only roll money like that from one house to another?

Yes there is a way to do it, keeping money in real estate you do not pay the capital gains, though I believe you have a certain time limit. I think the only thing you get out of though is paying the capital gains on the farm land...

Hope this helps, but there are ways.

 

[ridermk]

You can do a 1031 excahnge even if one property has improvements on it and the other does not, qualifing it for a like kind exchange.

 

[xtreme]

I don't think that you can do a 1031 if you already have the money. If I remember right it has to be held by the title company while you do the exchange. But then again I am not an accountant...

--Matt

 

[ridermk]

I guess I didn't read he had already sold it. You need to set up a 1031 before the sale, you are correct. My bad.