Taxes on rental home sale

Forum|Forum|11 months ago
April 15, 2025
2 replies
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We sold a rental home for 535K and did 1031 exchange for a house at lesser value due to one member of LLC electing not to be part of new house purchase 315K. The sale occurred 12/23. Last April each of us received a k-1 for share of what I assume is the capital gains difference in the lesser price purchased. This year the member who chose not to be in 1031 got a K-1 for the Boot money that was received. Am I understanding correctly that the first K-1 was for the capital gains and that the K-1 that member recently received would be from the payment he received?

Thanks

Not A Product Question

RobertB4444

The first K-1 would have been the difference in the price and the resulting capital gains from the sale.

The second K-1 should represent the amount needed to buy out the remaining partner's interest in the original home since they were not participating in the partnership anymore.

@sd561

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Rick19744

Employee

There are not sufficient facts to address this question:

You can't "sell" a rental and have a Section 1031 in the same transaction.
Was the Section 1031 handled with an intermediary?
Hopefully the answer is "yes", as if not, you have a problem
Is the one LLC member still a member of the LLC?
Based on the limited facts, assuming a valid Section 1031, this is only a partial exchange since the FMV of the replacement property is less than the exchanged property.
You need to have an in-person visit with a tax professional to help you through this issue. A forum such as this is not good for these types of questions; too many facts and questions going back and forth.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.