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September 20, 2024
Question

Using proceeds on sale of rental property to pay off another rental property

  • September 20, 2024
  • 1 reply
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We would like to sell one of our rental properties (it was a primary residence, but we have not occupied it for 2 of the last 5 years).  Can we use the proceeds of this sale to pay off a HELOC that we took out on our primary residence to purchase another rental property and avoid capital gains tax?

1 reply

Employee
September 20, 2024

No, unfortunately it does not work that way. 

 

The only way to avoid (actually defer) tax on capital gains and, most likely, recapture would be to do a 1031 exchange.