Rental to Primary Residence After 1031

[Jay Staudt]

We are talking about relocating to a new state, and have been weighing our options where our rental properties are concerned.

One option we've tossed around is to sell one of our rentals up here in advance, use the proceeds to buy one in our new city using a 1031 exchange, and rent it out until we move. We would then move into that rental, and possibly live there for a year or two while looking at other homes and/or having ours built.

I haven't been able to find a hard and fast rule on how long you have to wait after purchasing a rental through a 1031 exchange before turning that rental into a primary residence. (I'm aware I may take a hit on capital gains if and when I ever sell the new property).

So the bottom line is, how long would we have to wait, after buying this property, to move into it? There would be no mortgage lender involved - we'd be paying cash - but I don't want to do anything illegal/unethical.