1031 Exchange to Owner Occupied multi-family

[Account Closed]

I'm curious to know if it is possible to use a 1031 Exchange to go from a non-owner occupied multi-family to an owner occupied multi-family. Are there rules prohibiting that?

[Dave Toelkes]

i disagree with Dion. Occupancy is a factor in 1031 exchange. You cannot exchange into an owner occupied residence. Investment use and personal use are not like-kind real estate.

If you find a multi-unit property you want to exchange into, and you want to live in one of the units as your primary residence, you can still exchange into the portion of the property that will be your investment rentals.

For example, you found a four-plex you want to acquire with a 1031 exchange. You want to live in one of the units and use the other three as rentals. Allocate 75% of the cost of the property to the investment rentals, then use your exchange funds to acquire those three units making sure that the purchase price for those three units is greater than or equal to the value of the property you relinquished.

Money to buy the unit you want to live in has to come from outside your exchange.