1031?

[Tyler Rodgers]

I'm not sure if this is the correct area for this, but I am definitely just "starting out", so here goes...

I want to sell my house and buy my first multi. Using a 1031, do I have to actually spend all the money I get from sale? I would like to us my home equity for a down payment, cash reserves, and maybe the start of my next down payment, but idk if this will hurt me come tax time. Thank you!

[Dave Foster]

@Tyler Rodgers, a 1031 starts with the sale of a piece of investment property.  If the house you are referencing selling is your primary residence you cannot do a 1031 to buy the multi.  and you probably don't want to in that situation anyway.  If you've lived in that property for 2 out of the last 5 years then the first $250K ($500K if married) of profit is tax free.  So sell your house and take the money tax free and buy a multi if you want.

1031 is only for property that you have purchased with the intent of holding for productive use in business trade or for investment.