Q: I am selling a rental property. Can I use the proceeds to pay down the loan on another rental property to avoid taxes?
Colorado. No papers are signed yet
A: Your idea will not avoid capital gains taxes on the gain from the sale. I am aware of three possible solutions to avoiding these taxes. First is a 1031 exchange and involves buying another qualifying property and rolling the gain into that - there are complicated rules to this. The second method is to sell something else at a loss so as to offset any tax. The final way is to use the rental as your primary residence for two years and then use the $250,000 exclusion ($500,000 for married couples). None of these will accomplish what you want.
Tristan Kenyon Schultz agrees with this answer
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
