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Updated over 4 years ago on . Most recent reply
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1031 (or similar) selling rental for down payment on primary?
Is there any tax strategy to not pay capital gains tax if I wanted to sell a rental house and use the equity to help with the down payment in a primary residence?
We're looking at a home that it more expensive than we'd typically think about, but if we sold our primary home and one of our rentals, we could pay it down substantially.
(Also, I assume the answer is no, but is there any similar strategy to sell a property and use those proceeds to pay down the mortgage on another investment property?)
In my limited experience I don't believe either is possible, but I'd hate to not ask and miss out.
Most Popular Reply
I've heard of people using the 1031 to sell a rental and buy the primary they want but instead of moving in immediately, they rent the primary out for a year or so. This works because you are exchanging a rental for a rental. It requires patience, but can work to avoid capital gains.