1031 turning into a primary residence

[Michael Batshon]

Hi there,

I currently own a 1 bedroom condo in the bay area and i am renting it out. The condo is worth about 820k and i want to sell it to buy a single family house about 20 miles away. I paid 560k for the condo in 2016 and only owe about 345k on it. My goal here is to do a 1031 exchange and claim the single family house as a rental property but i want to live in it in the future. What would be the best strategy to take? I obviously don"t want to paid capital gains on the home but i want to do everything legally. I have heard of people putting a home into a LLC and paying the LLC rent, is that possible in this situation and is it also legal to do?

Thanks for the help