Lady Lake, FL asked in Tax Law for Florida

Q: Do I have to pay taxes if I invest the money earned in a rental property into my primary residence?

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2 Lawyer Answers
D. Mathew Blackburn
D. Mathew Blackburn
Answered
  • Tax Law Lawyer
  • Englewood, CO

A: Yes, money earned through rents or through the sale of the property are both taxable and putting that money into a private residence is not an exemption.

Greg Freeze
Greg Freeze
Answered

A: Federal taxes are a funny thing, done in two steps. Step one, money earned is income.

Step two, putting that money earned into your primary residence is not an exemption.

For those planning in advance, the 1031 Exchange is the magic ticket to avoid a taxable event when selling rental property. I couldn't tell if your "money earned" was from rent or from selling, but either way, in step one, it's income.

So, after these two steps, you get taxes.

"Tis impossible to be sure of any thing but Death and Taxes." Christopher Bullock, The Cobler of Preston (1716).

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