What to Know About 1031 Exchanges Involving Gifted Property

Gifted Property

Have you received property as a gift? Is the property valuable? Do you think you might sell the property in the future a big profit?

You may be wondering how gain is calculated when you sell property that you received as a gift.

How to Save Money on Taxes

When you sell a property (such as a capital asset like land), the difference between the sale price and the seller’s basis in your property (which is usually its previous cost), is either a capital gain or a capital loss.

A capital gain occurs when your property sells for more than your basis. A capital loss occurs if your property sells for less than your basis.

What is Your Basis:

When you are gifted a property, you take the property with a carry over basis.  That means that your basis is the same as the basis of the person who gave it to you. 

Another way of saying this is your carry-over basis (as the recipient or donee of the gifted property) is the same basis as your donor’s; the basis is simply shifted over when the gift is made to you.  [IRC Section 102  Gifts and Inheritances of property are not included in the gross income of the donee at the time of the gift if donor was acting out of love, affection, admiration, respect, etc.]

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.


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