Convert STR to primary to avoid depreciation recapture?

[Tyler Speelman]

Hey BP folks!

We have a few STRs that we have done cost segregation studies on. After operating the STR for the first year can we turn the STR into our primary residence for 2 years then sell and avoid capital gains tax and depreciation recapture instead of doing a 1031 exchange?

[Andrew Strauss]

Hi Tyler - you cannot avoid depreciation recapture if you convert STR into primary residence and then sell it. Capital gain can be avoided by using sec 121 home exclusion (upto certain limit).