1031 exchange use for existing new property

[Muhammad Ali Raza]

Dear Expert, I need your advise on my rental exchange. Below is my scenario.

I have 2 x below rental and would like to sell Rental#1 and want to move the gain into Rental#2 which is the newer home.

Please advise , can I do that ?

Rental#1: 2016 built as Primary residence and converted into investment in 2020.

Rental#2: 2023 built home and bought in 2023 as investment property. 

[Dave Foster]

@Muhammad Ali Raza, You cannot 1031 into real estate you already own.  But you might go one step further and 1031 the sale of both of your older properties into one or more new properties.   Either combining the sales into one larger property (maybe even a newer multi-family).  Or into multiple smaller properties.

Many of our clients are 1031 exchanging from older properties into new construction to get away from capital expense exposure.  If you find a property being built that isn't going to be done for a year you can put it under contract now.  And when it is a couple of months from being complete you sell your old properties and then buy the new property.

You can't take title to your new property before you close the sale of your old property.  But you an be under contract for your new property before you close the sale of your old property.