Have you looked at the title of accompanying article and the one in the last tax bulletin, and thought -- I don't need to know about that, I don't plan on purchasing any investment property, so that does not apply to me? Well, you may want to use tax-deferred exchanges without purchasing any investment property at all.
A recent IRS publication discussed the situation of several siblings jointly inheriting several pieces of property. On the one hand, they did not want to sell the properties but on the other, they did not want to hold the properties jointly -- each wanted his or her own piece of property. How to achieve this ? -- by tax-free exchanges. Using tax-free exchanges, each sibling would exchange his or her joint interests to come up with suitable property that each could own separately.
In thinking about such exchanges, you should remember that you can combine a tax-deferred exchange on one side with a taxable exchange on another side for the sibling or cousin who wants cash. Not only that, but you may either want to take some cash out of a mostly tax-deferred exchange, or put some cash in to trade up in the exchange to better, more expensive property.
These are just some examples of using tax-deferred exchanges in estate planning. In estate planning, both before death after death, IRC sec 1031 tax-deferred exchanges are one of the arrows we keep in our quiver to help you hit your mark.
Copyright Eleanor S. Hansen 1995.
Deductions/Education/Gift&EstatePlans/HomeownershipIncentives/
Investments/RealEstate/RetirementPlans/HomePage