1031 Exchanges for Rental Property Tax Benefits
by B & B
(New Jersey, USA)
Rental property tax tip - We became investors only after the family home was titled to my spouse. She hadn't lived in it for over 40 years and we were forced to rent the home to an older sister. After she moved out and into an assisted living facility, we could defer capital gain taxes for our family home of 60 years.
We have never heard of a 1031 exchange until we were facing with a 15% federal capital gain tax and a 8.97% New Jersey capital gains tax. Close to 24% or 30k was going to be lost to taxes on the family home of 60 years.
That was enough to make us look into a 1031 deferred exchange. Taxes on capital gains can be deferred if we could find and invest in a like-kind rental property in a safer neighborhood. So even at an older age we are looking to become landlords.
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