DVC: a like kind exchange with a real estate sale?

[twinsouvenirs]

So we will be paying for DVC out of the proceeds of the sale of our condo. We will be making a little bit of money on the sale so ideally the DVC expense can offset the capital gains tax we might otherwise pay through like-kind exchange... but we're not sure if this will be the case. Any idea? Has anyone done this? (i.e. we are selling condo for, say, a 15k profit... can we offset 15k of the DVC purchase price?)

 

[twinsouvenirs]

I may have found the answer...
http://apiexchange.com/index_main.php?id=8&idz=62

 

[WebmasterDoc]

I may have found the answer...
http://apiexchange.com/index_main.php?id=8&idz=62

What answer have you found?

#1 would appear to provide the answer.

I'm not sure #2 would meet any IRS test regarding a DVC purchase even though there is a specific title, because you are not using a specific unit for a specified period of time. In addition, the DVC documents clearly state that the purchase is not an investment.

 

[twinsouvenirs]

I think the fact that we rented the condo means that we ruined the like kind exchange. Such is life!

 

[drusba]

A like kind exchange with deferral of capital gain is something that involves two properties held for the purpose of investment or use in a business. You are neither proposing exchanging like kind property nor getting a business use property, including because DVC prohibits owning just for commercial purposes.

It sounds like you are not referring to a like kind exchange but instead the deferral of capital gain that applies when you sell a residence and purchase another. But that deferral would not apply either since it needs to be your principal place of residence which the DVC timeshare could not be.

In other words, there is no tax provision I am aware of that would allow you to sell your condo, whether it was held as your residence or for the purpose of rental, and be able to defer declaring gain by buying a DVC timeshare.

 

[twinsouvenirs]

Thank you that is exactly what I meant. We were hoping to justify the purchase with the tax offset but I guess we'll have to rely on other justifications!