1031 Exchange 2 properties for 1.

[Brian Ovalle]

Hello everyone, I am new here and had a question. I was wondering if in my case, can I 1031 exchange my first property I bought 2 years ago that I now rent? And as a follow up question, I was wondering if yes, can you 1031 2 properties that have different owners into 1? ( My first rental property and my mom's primary residence to 1031 exchange into a bigger primary residence for us?) Thank you in advance!

[Dave Foster]

@Brian Ovalle, You can combine 1031 exchanges to purchase larger properties.  And you can combine different exchanges from different owners as long as each exchanger is purchasing a tenant in common % of the new property that is at least as much as they sold.

But you cannot 1031 a primary residence.  And you cannot do a 1031 exchange into a property that is your new primary residence.  The 1031 exchange is only for investment property to investment property.

In your mom's case, she probably qualifies for the primary residence exemption and the first $250K of profit in her sale would be tax free.  As long as she has iived in it for 2 out of the previous 5 years.  So she doesn't need an exchange.   

You can do an exchange into new investment property.  But not into a primary residence for yourself.

[Brian Ovalle]

@Dave Foster That makes a lot of since. Thank you so much!