Tax Consultation on Property Acquisition Time in 1031 Exchange
This article compiles a tax consultation regarding a 1031 exchange: an individual purchased residential rental property in 2009, transferred it to a C corporation LLC established by them in 2015, and the LLC now plans to sell the property and reinvest to defer capital gains tax. The core issue is how the property acquisition time should be determined, and whether there are other tax avoidance avenues if reinvestment is not chosen.
Hello, I have a question about 1031 exchanges.
An LLC taxed as a C corporation holds a residential rental property. The property was originally owned by an individual who established the LLC in 2015 and then transferred ownership of the property to the company. If the property was originally purchased by the individual in 2009 for $150,000 and transferred to the company in 2015, how should the "acquisition date" of the property be determined for a 1031 exchange?
It should be noted that the company plans to purchase an investment property to avoid paying capital gains tax. The current property is being sold for approximately $250,000. The LLC has been filing Form 1120 since its inception, with annual depreciation of about $3,200.
If the property owner decides not to reinvest, are there any other alternatives to avoid capital gains tax?
Thank you in advance for your answers!