Can capital gains tax on rental real estate be offset by the purchase of other property?

Jun 03, 2019

askacpaiconCan capital gains tax on rental real estate be offset by a time-share purchase? A motor home? A cabin cruiser yacht?

You cannot offset a capital gain by purchasing other property. You may only defer the gain in a like-kind exchange of like-kind property. This defers the gain until the replacement property is sold, unless it is replaced with like-kind property. RVs and other large living quarters that move around are considered personal property, and thus not eligible for a like-kind exchange. The only way any of these items would qualify is if they are stationary (think a boat that is permanently docked and assess real estate tax) and help out as investment property (i.e., a time share that is purchased for the purpose of renting to others). Purchasing a new rental real estate property would be eligible for a like-kind exchange.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Amy L. Bishop, CPA, MST, is a tax and accounting manager with Delisi, Keenan & Associates PC in Greensburg, Pa.

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