1031 Exchange or Other Strategies

[Tam Le]

Hi,

I am going to put my rental property on the market and am looking to take the equity from it to buy a new home (primary residence).  Question is can I use the 1031 exchange for this or does the new home have to be a rental?  Also what strategies would one suggest I look into to avoid the capital gains tax on profit from the rental.

Thanks,

Tam

[David Rhodes]

It can be done, but the key is your intention at the time you acquired the replacement property. ... If so, you may be able to re-characterize that 1031 exchange-deferred gain on investment property into gain on your principal residence and enjoy some or all of the $250,000 or $500,000 exclusion on its sale.

Check this article out it should help.

https://farr.com/1031-exchange-into-principal-residence/