Escrow closes tomorrow and funds are scheduled to go directly from 1st American title to 1st American Exchange office (1031). I’m not being understood on my question…
$325,000 was used in a 1031 sale of property A and purchase of property B. An additional $125,000 of my cash was used to complete the purchase of property B.
Now to sell property B I hope to use the original 1031 money but not my $125,000 but I think I understand the IRS wants the first funds out of the sale to be taxed as the initial $325,000’s gain if not reinvested in like property. I want to move the original $325,000 into the exchange purchasing property C and keep the $125,000 back (there is no gain on the sale of property B). My first question:
If, How?
If I can not separate funds now after dumping it in when purchasing property B… then my second question is:
Will the gain associated with the $325,000 coming into the exchange be of value against my Schedule E income losses. I have no capital gain or loss on Schedule E only operational loss and depreciation over the last few years (COVID etc.)
Any thoughts would be greatly appreciated.
