1031 Exchange

[phx1112-yahoo-co]

I had to move from AZ to IA for a medical emergency for my grandson. I didn't want to sell the AZ home but renting it turned into a nightmare. I sold it about 9 months after I moved to IA. Bought 3 IA properties ($280k) with the gain but from what I understand I still have to pay capital gains on the initial purchase of the AZ home ($290K).  I was in the AZ home for 2 years as my primary residence. Do I have to pay capital gains on my initial purchase price of $290K? Also, is there some sort of exemption since moving was due to a family medical emergency?

[DoninGA]

No, there is no such exemption for a family emergency for any gains on the personal residence that was sold.

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.

[Mike9241]

FYI a 1031 exchange can only be done with business or investment real estate. A residence used as the place you live never qualifies