Reverse 1031 Idea - Looking for Thoughts

[Marcus Hurley]

We are buying a new house after selling out old home and relocating.  We also own an investment property that I would like to get rid of (tired of being a landlord and it's not making much money).  I have the proceeds from the sale of our primary house sitting in a high yield bank account waiting for the closing.  Those proceeds will cover 75% of the purchase price of the new house.  I noticed that the new property is actually two different parcels (confirmed they are separate lots) and the thought occurred to me, why not buy one parcel (the one with the house on it) and reverse 1031 exchange the other?  Sellers are willing to split the sale into two separate transactions.  This would allow me to continue to defer (we bought the investment property with a previous 1031 exchange) capital gains on the proceeds of the investment property but essentially use the funds to pay for the new residence.  My new investment property would just happen to be a piece of vacant land next to my new primary residence.  No intent to use the develop the land for a vacation property.  We have enough cash and loan to comfortably buy the new property without any proceeds from the investment property so ding a reverse 1031 should not be an issue.  I am pretty certain we could sell the current property within 180 days.

My potential capital gain if we just sold the investment property outright are significant (about $200k).  We only owe about 40% of the sale price of the investment property.  My basis in the investment property is also pretty low.  Probably only 45% of the sale price.  Even if the vacant land is not valued at the full amount of my capital gains liability, I think it would cover enough to make it worthwhile.

Wondering what thoughts folks have and what questions I should be asking myself.