cap gains

[Jeffery Kuhl]

I purchased an investment property and lived in it whilst renovating. I am told upon selling I will have to pay around 25% cap gains tax(in north carolina). The only way I am aware of to avoid this is to live in the house for 2 years.

Is there another way???

[Bill Exeter]

The 1031 Exchange is not an option at this point because you are living there. A primary residence, second home or vacation home (personal use) do not qualify for 1031 Exchange treatment. The properties involved must be held for rental or investment purposes. You could move out of the property and then rent it for at least 12 months in order to qualify for tax-deferred exchange treatment.

@Ed L. Fees for 1031 Exchanges are not that expensive. The fee for a 1031 Exchange with one relinquished property and one replacement properties are generally $750.00 to $1,800.00 depending on whether you are on the west coast or east coast.