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  • From: Gene GeRue <genegerue AT ruralize.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: RE: [Homestead] Housing bubble
  • Date: Wed, 01 Jun 2005 15:57:59 -0700


Say Gene, could you go over some of the particulars about how to save
getting taxed on the sale of property. My wife recently inherited a lot
in Illinois worth about $40,000. We would like to take that money and
invest in property on a creek/river in Missouri.

Clint, the tax-free profit is on the sale of a personal home in which you have resided for two of the last five years.

To do a 1031 tax-deferred exchange, you have to exchange like property, for instance investment property for investment property. You might be able to exchange the lot for land but your wife may be liable for inheritance tax anyway. To do a 1031 you have to get a sale on the lot with contract language where the buyer agrees to cooperate with a 1031 exchange. Then you have 45 days to identify the property you will buy. You have 180 days from date of sale to close the exchange. The sale money has to be held by a qualified intermediary, who will charge a fee.






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