Basis of a lot I got from a straight across trade of another lot of equal value

[rab77]

I am considering trading a lot I own for another of equal value.  This is not a 1031 trade just an exchange between the two parties.  What is my basis in the lot acquired in the trade.  Thank you

[Opus 17]

If you don't officially do a 1031 exchange, then this is barter, and barter is taxable according to all the normal rules as if it was money.  Suppose you bought lot A 10 years ago for $50,000 and it is now worth $100,000.  You trade it for lot B which also has a present market value of $100,000.  You have bartered away lot A for $100,000 and you must realize that and report it as a taxable capital gain ($100,000 sales price minus $50,000 basis = $50,000 capital gain).  Then your basis in the new lot would be $100,000 (the amount reported as proceeds in the barter sale of lot A equals the barter cost of lot B.)

[AmeliesUncle]

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@rab77 wrote:

This is not a 1031 trade 

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Why is it not a 1031 Exchange?  What circumstance disqualifies it from being a 1031 Exchange?

You need to determine if it is 1031 Exchange before you can determine the Basis in the new property.

[rab77]

Actually, I don't know the definition of a 1031 exchange, so possibly it is and I don't realize it.  I've done 1031 exchanges in the past, and it involved a intermediate party that held the funds until the new property was acquired.  So now I'm wondering, what in fact is the definition of a 1031 exchange, and can it be accomplished without a mediator, or a third party.  Appreciate any comments. 

[M-MTax]

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@AmeliesUncle wrote

Why is it not a 1031 Exchange?  

Yeah, I don't get this either. A 1031 Exchange is business/investment like-kind property (real property now) for business/investment like-kind property, which appears to be the case here. It also appears that the property to be relinquished and the replacement property have the same FMV and there doesn't appear as if there will be any boot.

@rab77 may want to contact a local intermediary (QI), however, to facilitate the exchange of the deeds.

[AmeliesUncle]

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@rab77 wrote:

can it be accomplished without a mediator, or a third party.  

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In most cases, no.  But in cases like yours, yes.

In most cases, the person receiving your property isn't the same that that is giving you their property.  That is why most cases need a third-party intermediary (which also allows timing differences).

But in your case, it sounds like the person receiving your property is the same person that is giving you their property, in which case a third-party intermediary may not be needed. 

I suggest that you go to a good tax professional to look at the situation, as well as to advise you of anything else that may apply to you.

[M-MTax]

Just my opinion but I think @rab77 should consult with a QI regardless.

The QI will document the transaction thoroughly so there is no subsequent issue with the IRS and will act as an agent for both parties with respect to the property transfers. 

In all likelihood, transfer tax will have to be paid as well as other fees (such as title insurance) and the QI will ensure the whole transaction is handled properly.