CTC Real Estate Tax Strategies 2

Question 1

In a 1031 like-kind exchange, how many calendar days does a taxpayer have to identify potential replacement properties after closing on the relinquished property?

Accepted Answer

45 days

Answer

Under IRC Section 1031, the taxpayer must identify potential replacement properties in writing within 45 days of transferring the relinquished property.

Question 2

What is the total time allowed under IRC Section 1031 to complete a like-kind exchange by receiving the replacement property?

Accepted Answer

180 days from the transfer of the relinquished property

Answer

The taxpayer must receive the replacement property by the earlier of 180 calendar days after the transfer of the relinquished property or the due date (including extensions) of the tax return for the year of the exchange.

Question 3

Under IRC Section 121, what is the maximum gain exclusion on the sale of a primary residence for a married couple filing jointly?

Accepted Answer

$500,000

Answer

IRC Section 121 allows exclusion of up to $500,000 of gain for married couples filing jointly who owned and used the home as their principal residence for at least 2 of the last 5 years.

Question 4

What is the depreciation recapture tax rate that applies to gains attributable to Section 1250 straight-line depreciation on real property (unrecaptured Section 1250 gain)?

Accepted Answer

25%

Answer

Unrecaptured Section 1250 gain — attributable to straight-line depreciation previously claimed on real property — is taxed at a maximum rate of 25% rather than the standard long-term capital gains rate.

Question 5

What primary tax benefit do Qualified Opportunity Zone (QOZ) fund investments offer to taxpayers who invest capital gains?

Accepted Answer

Temporary deferral of gain, potential step-up in basis, and exclusion of appreciation after 10 years

Answer

QOZ investments allow deferral of recognized gain until 2026 (or earlier sale), a 10% step-up if held 5 years, 15% if held 7 years, and complete exclusion of post-investment appreciation if held at least 10 years.

CTC - Certified Tax Coach Practice Test

CTC - Certified Tax Coach Practice Test

CTC Real Estate Tax Strategies 2