Staying at 1031 Exchange property during rehab

[Jeff Hedfors]

We are completing an exchange in St. Paul, MN. While keeping our primary residence in Arizona, we want to stay at the property for a couple of months to get it rent ready. Is this going to cause any trouble with the 1031 exchange?

[Toni Baca]

Hi Jeff, 

This is perfectly okay! This does not affect your 1031 exchange or your primary residence. Since you are doing improvements on the residence as the landlord, this is still considered your investment property and does not invalidate your exchange. 

You can spend time in your 1031 property as long as you are documenting that each visit is to do improvements on the property. In the rare case of an audit, make sure to document (in a journal or spreadsheet) all of your receipts and daily work you are doing while you are there.

Also do not change any of your primary residence documents to your investment property (i.e. Driver's licence address etc.) which I doubt you would, but still putting that out there. :)

Let me know if you have any other questions, I can find the exact ruling and court case stating this is okay.