Question: 1031 exchange

Question: 1031 exchange
I have a town home. If I sold it and invested the proceeds in Real Estate First Trust Deeds would it qualify as an 1031 exchange?
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Reply to
No tax knowledge
You don't mention if it is a personal residence or other personal use property. If it is, a Sec. 1031 exchange can't be done. A 1031 exchange is the exchange of property held for productive use or investment, not personal use.
Also, if it's your personal residence, up to $250,000 ($500,000 on a joint return where you both lived in the residence) of gain can be excluded from income if you lived in and owned the house for two of the last five years.
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Reply to
adjunct

I apologize. I should have mentioned that it is a rental. Please let me know.
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Reply to
no tax knowledge
Seems to me that the "Real Estate First Trust Deeds" couldn't possibly be *like-kind* property - i.e. real estate - in the exchange, and that the gain on the sale (even if it were structured properly as an exchange) would be totally taxable. Are the first trust deeds considered to be real estate? I think they're mortgage notes, am I right?
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Reply to
lotax

A real estate deed of trust is simply security for a loan - essentially the same as a mortgage. If debt on property qualified as a like-kind exchange, why would anybody do installment sales?
I believe you are right.
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Stu 
http://DownToEarthLawyer.com
Reply to
Stuart Bronstein

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