House-Hack Verification?

[Geo Tan]

Hello BiggerPockets community!

This may be a very simple question but I was wondering if anyone here knew what sort of documents do I need to prove that I lived in the property for the 2 out of 5 years owned in order to get the $250,000 tax free. If there is any other documentation or proof that I would need for this process I'd love to hear more about it as well.

My current situation is that I have a property that I purchased for $150k that I'll be selling for $240k this month. I am debating if I should go forward with a 1031 which has the obvious time deadlines, or just to get the up to $250k tax free. I have owned the property a little over 5 years and I have lived in it for at least 2 so no problems there.

Thanks in advance as always!

[Dave Foster]

@Geo Tan,  The actual act of living there would produce a copius amount of documentation including - mail, utility bills, drivers license and voter registration, school district registration, pictures of family bar b ques,  affadavits from the paper route boy,  etc etc.  

In order for that property to qualify for both the `primary residence exemption and sec 1031 it must be a current rental that you have also lived in for 2 out of the last 5 years.  

If that is the case then why even consider a 1031 when..

1. A 1031 costs money

2. A 1031 only defers taxes

3. You have to reinvest a 1031

4. You have strict timelines on a 1031

Tax free is tax free.  No reinvestment requirements, no fee and no rule following angst.