g g asked:


I rented my residence for seven years because I was living out of the country. Now I must move to another city. Can I live in the building purchased by the 1031 exchange, or must I rent it out?

Joy

4 Responses to “Can you make a 1031 exchange FROM a rental to a RESIDENCE in California?”

1. ricks on August 25th, 2010 7:24 am

   must be like properties: rental to rental, residence to residence

2. Justcurious on August 26th, 2010 10:06 am

   A 1031 exchange must be for like-kind, with all of the money from the one you are selling going into the new like-kind property. So, no you can’t exchange for a personal residence, but you can exchange for one that you intend to rent. So rent it for a while, and then change it to a personal residence. There is no real guideline on how long you have to hold it as a rental before changing it to your personal residence. Consult your tax person to be safe.

   Chrisusc is correct that it must be investment property; however a rental property is investment property even if it is just a single family residence that used to be your personal residence. So this would qualify for a 1031 if you buy another like-kind property.

3. ogrendle on August 26th, 2010 11:33 pm

   1031 is Federal not by the state. Like kind to like kind.

4. Chrisusc on August 29th, 2010 10:33 am

   None of these poster have any clue about what they are talking about.

   A 1031 Exchange can only be done with investment property. You cannot exchange into an invesment property and then get a personal residence without incurring tax liability when you sell the second home.

   You just need to sell the rental property and pay tax on any gain (or) you can live in the home for two more years and then sell it and get the Sec 121 exclusion from gain of $250,000.

   I would probably speak with a CPA before you make the next move.