She called her accountant. He told her that she did not qualify for the deferral of gain on the house. The law said that she had to hold it for five years after an exchange to qualify for the deferral of gain and that she had only had it for three years. She would rent it again, but she couldn’t bear to have another incident like the first. Enrique was adamant that he wanted her to join him in Venice. Crestfallen she removed the antiques and put them in storage and put in some generic furniture and rented out the house. After two more years and much damage and headaches and several flights back and forth from New York to Venice and a six month stay in the small house documented by her passport, she sold the bungalo and lived happily ever after with Enrique eating Italian food, drinking wine and going down the romantic canals of beautiful Venice.

She got a concierge rental agency who could really make top dollar for her. She spent some money to get the house outfitted with lovely antiques and satin sheets. Everything was perfect.

She got a request to rent the house in mid-March, the following year. There was a high stakes poker tournament right up the road in Atlantic City. All the hotels were booked. The event was televised. The house was being rented by Guisseppe Marvel, a legendary poker player. As luck would have it Guisseppe bet on 2 jacks and the flop revealed two more jacks. His opponent thought he had the tournament won with a full house and Guisseppe went all in. His opponent had fewer chips at the time and also went all in. The place erupted in celebration. At 4 a.m., he staggered back into the small cottage with about 100 of his closest friends. He called the concierge to bring more liquor and a chef for breakfast and they were procured. A two day party ensued. After the party was over and Guisseppe moved out, the concierge went to the bungalow. It looked like a hurricane had hit Ocean City, New Jersey. Windows were broken, antiques were damaged, the total bill was $200,000. Eleanor felt as though she had been violated. Guisseppe and the insurance company got it fixed back to close to its original state, but Eleanor decided never to put it out for rent again. She liked the cottage and figured that if two weeks were nice 2 months would be even nicer. Since it was debt free at that point, she went ahead and converted it to her personal use and moved into it as her personal residence. She sold her house pocketed the money tax free, as she only had about $250,000 of gain on the place. She thought she was in heaven. She dated handsome younger men and there was always something to do. After two years, she met a swarthy young man from Italy named Enrique. He wanted to marry her and move to Venice. She readily agreed. She decided to sell her house.

Eleanor Breezy decided that rather than have an investment rental property in town, she’d get one at the beach so she could use it 14 days out of the year and have fun at the beach. After all she was at 32 still young, still beautiful and divorced without children. She got the rental property and her house in the divorce. She consulted her accountant about the tax impact of selling it. He told her that she was going to get hit pretty hard with taxes because her ex had depreciated down to nothing prior to giving it to her in the divorce. He suggested that there was something called a like kind exchange and that she should consult an attorney for the specifics. She went to see a real estate attorney, Geoffrey Dunder. Mr. Dunder agreed that a like kind exchange would work for her and that he could act as intermediary and paper the transaction. He went through the usual discussion of the identification rule of 45 days and the settlement rule of 180 days. She put her property on the market and started looking for her dream beach house. She immediately got a contract for the rental property from a nice couple with two kids and a dog. She was very happy that the house would have a good owner. The contract called for settlement in 30 days, she bumped it up to 60 days to give her time to find the replacement property. Geoffrey made sure that the appropriate language was in the contract to permit the like kind exchange.

She found a darling cottage in Ocean City, New Jersey. It was perfect. She could rent it out, and use it 14 days in May and in September and still get prime rental dollars. It had a new kitchen with all the energy efficient and high end appliances. She put a contract down and the price was workable with the other sale and the settlement date tracked so that it would occur shortly after the other contract settled. She smartly kept the sale of other property contingency in the contract in case something blew up. The old property settled and one week later she settled on the new property. The paperwork was flawless and she did not recognize any taxes on the transaction.