Selling my llc property and purchase my primary home

[Andy Mei]

Hi gurus, long time lurker and first time poster.

I am considering selling my llc owned (40 percent ownership) rental property, and use fund to purchase my primary house in order minimize tax triggered on profit of the rental property.  Does this approach work?  Any better solution I could defer tax generated by selling my rental?

[Brandon Hall]

@Andy Mei What you are describing is a 1031 Exchange and it is an excellent way to defer capital gains on an investment property. However, the new property that you are rolling your gains into must have a business use. 

According to the IRS code: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment."

@Bill Exeter will be able to tell you more.