Dec

9

If I buy an investment property through 1031 exchange, what happens if I move in to the unit?

Filed Under Home :: Real Estate 

dummy asked:


I bought a rental property lthrough 1031 exchange last year in another town, but now want to move there to live. What are the tax implications? Will I have to pay the deferred capital gains taxes?

Leon
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    • Comments

    No Responses to “If I buy an investment property through 1031 exchange, what happens if I move in to the unit?”

    1. spicertax on December 10th, 2010 2:01 pm

      No tax due when you move in. But you will not get the 250,000/500,000 capital gain exemption when you sell it unless you live there for 5 years. This is longer than the normal 2 year rule for getting a home sale exemption from gains.

    2. El_Nimo on December 11th, 2010 2:19 am

      You should consult a CPA or tax attorney on this. Even if you live in it you will not be able to sell the property tax free.

      Why? You were able to take a depreciation on your old property and then received a gain on it when you 1031 exchanged it. A 1031 only defers taxes not avoid it.