Tips for Parents transitioning from Income property to SF

Bel Air, CA · Member since 2017 · 165 posts · 47 votes

Parents owned their 2F since the 80s but are finally selling, and retiring to a SF being purchased and moved into before they close on the 2F.

With current NYC moratorium on eviction, how do they smoothly vacate current tenant in 2F who's been there for years but only month-to-month?; what sort of notice should be given to tenant and how soon in advance, given this year's special considerations?

If a 1031 is feasible how do they do it? They already have an attorney for the SF but not yet for the 2F, if will be different due to distance/counties.

Any other helpful considerations? Thanks so much in advance, fellow BPers!

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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
5y
@Jonn Vidal, There would be a possibility of a partial 1031 exchange in this scenario. But your parents will need to purchase another property to be used for investment in addition to the property they are moving into. The 1031 can only be used to sell investment property and purchase new property to be used for investment. So the part of the 2 family house used for investment could be exchanged in a 1031 for more investment property.
The portion they live in should be eligible for the primary residence exemption of sec 121. and they' can take the first $500K of profit on that tax free. They can use this money to purchase the new primary.
The Key to a successful 1031 is that they need to use the services of qualified intermediary who in an unrelated 3rd party in addition to all of your regular vendors. Location isn't going to be an issue. But the QI has to be involved prior to the closing of the sale of the old property.
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