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I have a somewhat complicated question about 1031 Real Estate exchanges.
My parents own three homes, two outright, one with a mortgage. They live in their primary residence and the condo. The condo has a mortgage on it. My grandmother lived in the second home and "rented" it, but moved out recently.
My parents are not cut out to be landlords. So they are in the process of selling the second home/rental. It was suggested by an accountant that they could do a 1031 exchange to avoid taxes.
How would a 1031 work? Would it be possible to pay off the condo with the proceeds and rent it out? The rental would be to my grandmother probably. The rental home would sell for $300k, the condo for around $350k, and the primary home, I guess $600k.
The reason would be that my parents want to buy a home instead of a condo in that area where the condo is, and sell their primary residence. They are planning on selling their home I think in the next year. The area the condo is in, is more expensive.
How much taxes are they looking at for the rental home if not? How does depreciation on a rental work?
What's the best financial move for them? I'm asking because my mom asked me and she doesn't trust her accountant.
My parents own three homes, two outright, one with a mortgage. They live in their primary residence and the condo. The condo has a mortgage on it. My grandmother lived in the second home and "rented" it, but moved out recently.
My parents are not cut out to be landlords. So they are in the process of selling the second home/rental. It was suggested by an accountant that they could do a 1031 exchange to avoid taxes.
How would a 1031 work? Would it be possible to pay off the condo with the proceeds and rent it out? The rental would be to my grandmother probably. The rental home would sell for $300k, the condo for around $350k, and the primary home, I guess $600k.
The reason would be that my parents want to buy a home instead of a condo in that area where the condo is, and sell their primary residence. They are planning on selling their home I think in the next year. The area the condo is in, is more expensive.
How much taxes are they looking at for the rental home if not? How does depreciation on a rental work?
What's the best financial move for them? I'm asking because my mom asked me and she doesn't trust her accountant.
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