Can a Residential Property be part Investment(1031) & part Residential ? If so.....

[Steve Hungerford]

Hello,

Here is the scenario. An investment property (residential-rental) that would be 1031 into a bigger more expensive residential property. Part of the property would be used as a primary residence and part as an investment. Cash above what would be 1031 over would be for the primary residential portion. Likely a property with an ADU that could be rented out. Or developing an ADU/Guest House on the property to rent out.

[Steve Hungerford]

Quote from @Dave Foster:

@Steve Hungerford, Well it's really all going to come down to your accountant's comfort level.  They're the ones who will make the allocation.  And just like a home office - the more gray it is, the more sticky the IRS will be if they look.

 In other words this is a gray area ? There are not clear rules in place as to how to allocate portions to a residential property like this. That means each CPA decides how they want to do it.