real estate capital gains and 1031 exchange

[amyonghwee]

In 2017, I bought a plot of land for $60,000. In 2025, if I sell it for eg $360,000. This implies a capital gain of $300,000??? I am thinking of using 1031 exchange. Can I keep this initial capital of $60,000 and not be part of the 1031 exchange to get another property ? Will this $60,000 be taxable?

[tagteam · Accepted solution]

The $60,000 is your basis and is not taxable. The gain can be deferred in many instances.

You need to consult with a local QI (qualified intermediary).

See https://www.irs.gov/pub/irs-news/fs-08-18.pdf

[NateTheGrEAt · Accepted solution]

To fully defer the gain you must reinvest all of the sales proceeds. 1031 Exchange: How it Works - TurboTax Tax Tips & Videos

You cannot designate specific dollars out of the sales proceeds as being your basis. If you take out $60,000 from the sales proceeds, this will be treated as not deferring $60,000 of gain and will be taxable. 

[amyonghwee]

@NateTheGrEAt 

Thanks for the reply and article!