You are correct. The replacement property must be identified within 45 days. You take possession of the replacement property within 180 days.

Keep in mind that home office deduction is available to you only if you use the space exclusively for trade or business.

You probably won't benefit from sales tax deduction because Federal allows either state sales tax deduction or state income tax deduction. Most people pay higher state income tax than sales tax unless you bought several big ticket items during the year. The reason why people in Texas can benefit from sales tax deduction is because there's no personal income tax in Texas.

If you don't live too far from your rental property, I would suggest you to move into the rental property and live in it for two years before selling it. So that you can benefit from the $500K exclusion of gain on sale of principal residence. If you are looking at a huge amount of gain, it might be worthwhile to do this for your other rental property.

 

Unless it just got extended in the bill Bush signed, the sales tax deduction ended with 2005.
Yes Scot you have to name the property within 45 days of selling yours, but you can start looking when you decide to sell, so you "could" have months to find a replacement property.

 

You need a CPA

 

Assuming I make the same or more $ next year, aren't I just delaying the inevitiable with a 1031 exchange? At what point would I recognize the gains if I were to do a 1031 exchange, then sell that property in 15 months?

 

When you sell and don't exchange anymore.
Scot I thought you were an accountant. Are you just testing everybody here?

 

I am a psuedo accountant.... Not a Tax Accountant. I do financial reporting for a manufacturing company.... easy stuff.... I don't have to read the rules, I just have to trick the auditors....

so if i delay $20k in profit to a new place.... and that house i sell for an additional $20k in profit....and I don't buy a new 1031.... I am now on the hook for $40k of profit at that point?

I guess if i knew i was going to make less $, or keep the next property for a really long time it would work out.....

thanks for all the help..

I did pass the cpa exam in 1995 or 1996 but never did stay at any CPA firm long enough to get my license....