1031 Tax Deferment possible for Primary?

[Shannon Bae]

We’ve been told by our real estate agent and by a lender that we can use the 1031 exchange for our primary, however, everything I’ve ever known about the 1031 is that it is ONLY for investment or business purpose, NOT for primary. I’m trying to figure out if there is some loophole or something they may be doing in order to use it successfully on the primary? I keep insisting it’s not possible they keep insisting it is. We’re going in circles and it’s driving me crazy! Has anyone ever used a 1031 somehow on their primary residence? (We are NOT planning to turn the new property into an investment) Thanks so much!

[Wayne Brooks]

Originally posted by @Shannon Bae:

Thanks for the reply @Bill Exeter! Obviously, this is your area of expertise so I appreciate the response! Ok, you’ve confirmed what I know and have researched. I cannot figure out how/why the agent AND the lender keep insisting I won’t have to pay tax on the profit above the $500k from Section 121..baffling..

If you moved out, rented it fir a year or two which makes an investment, then you could sell, using the 121 exclusion fir the $500k and 1031 the remaining profit into an investment property….that’s the only way.  If you simply sell now, no.