Forced to Sell with 1031 exchange?

[Helen Zhang]

I'm not sure if anyone else has encountered this issue... but I felt like I am almost at the point where I am forced to sell my investment property because of the recent changes in 1031 exchange where tax deferral is more than 500k. 

My property have gained more than 450k at this point, and I wonder if I sell my property now and exchange to buy two other smaller properties with 1031 exchange now, and let these two smaller property grow overtime. In future when I do 1031 exchange again, will I be taxed with capital gain when each of the smaller property did not gain up to 500k? 

[Bill B.]

The HOPE is if you do a 1031 exchange today in to 2 properties you’ll actually have more income and more capital gains than you would if you just kept the one. Otherwise there’s no reason to do it. The $500k exemption is only for married people selling their primary home, not an investment property. Even if you only make $1 you’d have capital gains tax and even worse depreciation recapture.