1031 on existing properties.

[Darren Redfearn]

Ok this is a weird idea I cooked up. Here’s what I want to do. I have a condo that has appreciated a ton that I bought in 2017, (like everyone) it’s a rental property. I was wondering if I could sell it and transfer that equity into a property I currently own as a primary home. I could start renting it out to cross my T’s if I had too. I read something the other day that indicated that this could be done. However I’m assuming it’s a little trickier, can anyone suggest where to start and where I could get help with the 1031 exchange. 

[Whitney Nash]

Hello, @Darren Redfearn

Generally, when you do a 1031 exchange the replacement property must be 'new to you', so you cannot put the exchange funds towards something that you already own. It also cannot be used toward paying off debt on a property that you own because debt is not considered 'like-kind real property'. It may be possible to use 1031 funds to improve upon investment property that you already own, but that is a more complicated and expensive type of exchange. Since the replacement property needs to be held for investment or use in a trade or business the property being a personal residence, in your case, wouldn't qualify as is and it would need to be rented out, at least to some extent.