Selling rental property and not reinvesting in rental

[Freida Whatley]

I am a first time user of Bigger Pockets but have a question that I cannot find an answer to by other means. I decided to see if anyone here could help me. My husband and I live in AL and own a condo in FL that we would like to sell. We are also selling our home in Jacksonville in order to move to Birmingham and we do not want to reinvest in rental property but want to use the money to purchase a home for our primary residence. I know IRS will get a chunk of this but am wondering if there is any legal way to invest this money in our home without them getting so much? Does anyone have any experience in this??

MODERATOR: THIS IS NOT AN OFFER TO SELL THIS PROPERTY. POSTS OFFERING ASSISTANCE IN SELLING THE PROPERTY OR TO BUY THIS PROPERTY WILL BE REMOVED.

[Bill Exeter]

Bryan H. You must sell and buy "Qualified Use" property in order to qualify for 1031 Exchange Treatment. This means that the property that you sell and the property that you buy must be held for rental, investment or use in a business. Property acquired and intended to be used as a primary residence does not qualify as Qualified Use property.

Serge S. it depends on what you mean by rental cycle. You must have the intent to hold for rental or investment. If you buy, rent for one month, and then move into it the IRS would most likely disqualify your 1031 Exchange unless you can prove that you did have the intent, but business, economic or life reasons changed your intent. Most experts recommend a rental period of at least 12 months or more so that you can easily prove intent to hold for investment.

Like kind refers to the fact that it must be real estate for real estate. Qualified Use refers to the actual use of the property.