Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Creative Real Estate Financing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 3 years ago on . Most recent reply

User Stats

122
Posts
63
Votes
Cody Smith
  • Realtor
  • Panama City Beach, FL
63
Votes |
122
Posts

Do I have to use a 1031 exchange to reinvest my equity to a STR?

Cody Smith
  • Realtor
  • Panama City Beach, FL
Posted

Hello BP, thanks for reading my post and the helpful responses I always get!

I currently have a single-family rental in the market I live in, Columbus, GA. I purchased this home in 2017 and lived in it as my primary until September of 2020. Since then, I have rented this property out and managed myself, I am currently bringing in about $700/mo dirty cashflow. Since purchasing this property, I have gained about $80,000 in equity in the home. 

I began looking into purchasing a short-term rental a few weeks ago. I initially planned to keep the long-term property and buy the STR with my own available capital, but now I am heavily considering selling the LTR and reinvesting the proceeds into a vacation rental condo somewhere on the gulf coast. Although I will be losing the LTR in the process, this exchange of property will take me from $700/mo cashflow to potentially significantly more per month, which is most important to me at the moment as I prepare to separate from the military in two years and lose my W-2 paycheck. Additionally, the LTR is due for a new roof and HVAC relatively soon, it's in a great location to sell fast, and I do not have the capital to keep the LTR and still purchase the STR condo. My thought-process is to trade an asset I paid nothing out of pocket for (VA loan on the LTR) and reinvest the money I have made into something that brings more cashflow to my pocket and I know will appreciate over time and be in demand since it's a condo on a very popular beach.


My question: since I lived in the property for 2 of the last 5 years, do I need to explore a 1031 exchange for the proceeds upon sale? Or am I able to take the proceeds as normal and just reinvest what I need for the down payment on the condo? I have tried to research this already, but I have not found clear guidance. 

Thank you!

  • Cody Smith
  • [email protected]
  • 770-597-0419
  • Most Popular Reply

    User Stats

    1,242
    Posts
    975
    Votes
    Doug Spence
    • Investor
    • San Diego, CA
    975
    Votes |
    1,242
    Posts
    Doug Spence
    • Investor
    • San Diego, CA
    Replied

    @Cody Smith Since you are military like myself, I believe the rule is extended to living in the home for 2 of the last 10 years (or 15 - I can't remember). Either way, this is a great question to ask your CPA since he or she will have a much better grasp of your personal financial situation. If you don't have a CPA, then take this as a sign that you should hire one! Especially since you're looking to expand your real estate portfolio.

    Good luck and keep us updated on what you decide to do!

    Loading replies...