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Updated over 7 years ago,

User Stats

7
Posts
4
Votes
Steven Clough
  • Investor
  • Arlee, MT
4
Votes |
7
Posts

Combined business use/primary residence property

Steven Clough
  • Investor
  • Arlee, MT
Posted

Forgive me if this isn't in the correct forum!

Ok BP forums, I'm in a bit of a conundrum trying to accomplish this transaction. Bear with me as I do my best to outline what's up.

My family and I are trying to relocate from CA to MT. Long story short, the house we currently live in is owned by my in-laws. We have no official equity in it and as such aren't counting on getting any cash from the sale of it (though we may, depending on how much it sells for.) We own a SFR that we've been renting out for 5 years. It's the only property we own. We want to buy a rural property in Montana that will be combined primary residence and business use. My wife is a trainer of dogs for various sports and working jobs, hence the rural property to have room to conduct her business. I've spoken with my tax accountant and 1031 facilitator and both say that I can use a 1031 from my rental into the portion of the property that will be for business use. I will need to have the primary and business use portions of the property appraised to establish the value for the exchange.

My SFR rental is valued between $180-205k (haven't had it appraised yet), the mortgage owed is $120k. The property we're looking at is listed for $400k. I have no money to put down other than what I get from the sale of the rental (unless we miraculously get $ from the sale of my in-laws property, which again I'm not counting on.)

I'm told by both the facilitator and CPA that I will need to pull two separate loans on the same property (it's not subdivided), one for the primary residence side and an investment loan for the business side. Does anyone have any experience with such a transaction? Does this sound correct so far? Any advice on how to proceed? I really appreciate any and all input. Thanks!

Steve

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