I'd like to get some opinions or options concerning a sale of purchase of some rental property. Here's my situation:
I'm planning to sell a small rental house that I have owned for about 13 years within the next few months. I'm also trying to purchase a condemned house (hurricane damage) that is next to my primary residence which will probably take place before the sale of my rental house. Once the condemned house is torn down, I'm planning to build a small house for my mother who is 75 years old and of limited financial means. The condemned house is not valuable, pre-say. The thing that makes it valuable, as with everything, is that more then one person wants it. There are 3 other bordering property owners that might want it. So the purchase can not be put off and will happen before the sale of my other rental property. My questions involve capital gain taxes and sale/purchase timing.
- Can I do a 1031 exchange if the purchase of the replacement property happens before the sale of the existing property?
- Can I do a 1031 exchange to build the house on property already owned? So I would use the profit from the rental house to build the new house.
- I was planning on using the newly built house as a rental, charging my mother rent, although somewhat reduced. Is there another/better way to own this house other then as an investment?
- Are there any other options that I forgot?
Thanks in advance
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