1031 to buy a Airbnb investment property

[Matt Smith]

I am planning to sell my regular rental to buy an Airbnb investment property. I would need to furnish it entirely. Can I deduct all those expenses from my 1031 proceeds (tax free)?

[Dave Foster]

@Matt Smith,  If you're selling your rental furnished then it's an easy matter.  Real estate for real estate and furnishings for other furnishings.  Furnishings in a situation like that are more like bowls and spoons in a restaurant sale.  There is the real estate component which qualifies for 1031 treatment and there is the personal property which may only be exchanged for like personal property.

If you're simply wanting to go buy new furniture out of your 1031 that's not as easy unless you close your purchase and use an lOC on the new property to purchase the personal property.