Can I 1031 Exchange in this Situation?

[Clayton Crouse]

BP Community,

I am in the military and am getting deployed soon.  As a result I am moving my family from Tucson back to ABQ, NM and into a property we currently own outright.  We had leased the property for the preceding 3 years.  My question is if I move my family back into the property for the duration of the deployment, can I still 1031 exchange it when we are ready to sell in the future or do I need to lease it out again prior to the exchange?

Thanks for any/all help...

CE

[Dave Foster]

Hi @Clayton Crouse, You and @Natalie Kolodij are correct.  If it's your primary it's not eligible for 1031.  And to make it eligible for 1031 you would need to move out and turn it into an investment for a bit.

However it's going to be worth your while spending a few minutes with an accountant to go over your specific situation.  There are some waivers and exceptions to the primary residence exclusion for active military that may leave you eligible to take some if not all of the proceeds tax free.

By they way - a great accountant who knows real estate in and out just gave you some good guidance.  @Natalie Kolodij rocks!