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Form 8824 AR: What You Should Know
In the event of an exchange of property on January 1, 2008, for purposes of the 2023 Tax Relief Act, the year in which the exchange occurred is deemed to be 2000. 1031 Like-Kind Exchanges Tax FAQ — Tax Relief Blog Mar 18, 2023 — The 1031 Exchange Tax is a business or investment tax imposed on exchanges of property of a like kind. It is collected from sellers using Form 4797, Recalculated For Arkansas. The IRS sets a minimum tax that you must pay: an extra 20% tax and a 50.00 administration fee. You only pay this 1031 exchange tax if you sell you own property, such as a home or business. You don't have to pay the 50.00 fee if you sell your own home or business. The 50.00 fee does not apply to exchanges of property of a like kind for property of a like kind. The amount you have to pay depends on the type of property. For example, if you are selling your home for 600,000, and you have an investment property, you can also deduct this 200,000 of cash received. You still have to pay the 20% tax and the 50.00 administration fee, but you only deduct 200,000, thus avoiding an extra 100,000 in taxes. The 200,000 of cash received from the sale of a home or business is all cash received from a sale of property of the like kind (not any of the appreciation of the asset in value). In other words, the sale of your home or business is the “sale” of real property. For example, if you lease your home and your annual rental income is 10,000, you can use that income as part of the 200,000 cash on hand to deduct the 100,000 in cash received from the sale of your home or business. The 200,000 of cash received from an in-state real estate transaction to sell real estate in a state other than Arkansas is in addition to the cash received from the sale of a home or business. To get the full amount of tax due on the real property sale, you would need to figure the tax on the basis that Arkansas as a state had provided all, or nearly all, of the income for which the tax was being claimed.
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