How to stay in CA market while living in Europe?

[Jason Varley]

Due to COVID, I returned to CA from Bali but will be moving to Europe in December. I rented out my primary residence before moving to Bali in June 2019 on a 2yr lease. When the lease ends July 2021, I plan to sell the house to a) take the cap gains exclusion, b) invest the equity in RE, and c) because the property is not a good rental property. I have had several rentals in the past but don’t hold any currently, although I own the condo that my mother-in-law lives in now (treated as my second home, not a rental). I will likely return to CA in 10yrs. I will probably own RE in CA and other western US markets in the meantime and 1031 exchange when trading up.

Other than selling rental assets to buy a primary residence when I return to live, are there other ways to stay in the CA market? Wouldn’t this trigger the deferred gains from the 1031’s? What if I build/buy a multi-family using a 1031 and live in part of it? My fear is cashing out now and not getting back in. What am I missing?