Capital Gains: How much of the proceeds have to be used to purchase similar property?

[taini2727]

What is the name of your state? Florida

Hello, and thank you in advance for any information you are able to provide.
Senario: My parents acquired a mortgage for my husband and I to purchase a ranch in Florida. We live on the ranch, (I am on the deed as a beneficiary) my husband and I, and claim homestead. My parents are the only ones on the note though. The ranch was purchased for $155,000.00 4 years ago.
My husband and I are selling the ranch and moving to Missouri. My parents are giving us the profit from the ranch to invest in another piece of property. The new piece of property that will be purchased will also go in their name using a 1031 exchange.

Question:
If the profit is $130,000. and only $90,000. is used to purchase new property do my parents pay capital gains on the remaining $40,000 or can they use the remaining money, which is being held in escrow (?) for improvements to this property?

Next question:
2 yrs down the road, (remember they are not living on this new property in Missouri and I am on the deed as a beneficiary just like the old property), my husband and I buy the farm from them. Could they give us the ranch as a gift and what would they pay on capital gains then?

Thank you again and I hope I wasn't to confusing.

 

[Snipes5]

What you are describing is a potential for IRS nightmare.

You need a 1031 Facilitator and an Enrolled Agent.

The whole thing sounds like a "tax motivated transaction", which the IRS will not appreciate.

You can't exchange personal use property in a 1031 exchange, and you can't sell property which is mortgaged by someone else.

Snipes

 

[taini2727]

Let me explain alittle better

Okay, maybe I didn't give enough information. First of all, we rent the farm. Pay a monthly rent which covers their mortgage. Second of all, they are my parents and I have full concent to sell the ranch that I have been paying for now for 4 years and have put every penny that i've had into in the process. All while rescueing over 300 starving horses. Not that it matters legally to anyone. The reason I asked about the gift is that they just sold their condo and were told they could give us a tax deductable gift up to $22000. a year that is why I asked that about the property. So the question still remains. They are selling this rental property and investing in another piece with the profits. If the new rental properties purchase price is less that the profits do they have to pay capital gains on the leftover amount or can it be used for improvements to the property?