1031 New Income Verification

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1031 New Income Verification

Jared MontBlanc
Investor · Pleasant Hill, CA · Member since 2017 · 37 posts · 5 votes

Trying to understand options as it pertains to the sale of a current AirBnB rental. What are the implications of doing a 1031 for an new investment property that eventually doesn’t generate rental income? Is somebody tracking that in some way?

Examples:

1. you buy a house and AirBnB for a year or two, then just move in

2. You buy a house and AirBnB for a year, then only AirBnB part of it only

3. You buy a house and call it a rental property but then just move it

Any guidance based on how we might be able to think about options to use 1031 for a home we can then live in would be appreciated.

Thank BP

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Jared MontBlanc, Almost everythings on the table for you!  When you do a 1031 you are selling property you have held for investment.  And you are buying property you also intend to use for investment.  

    1. The business model you choose doesn't matter. So changing from ltr to str or part str doesn't matter

    2. You do not have to keep it as investment forever.  It is important that you purchase it intending to use it for investment.  But after a year or two you can absolutely change the use of it - by moving in and converting itto your primary residence.

    3. - No.  Your intent must have been to use the new property for investment.  If you immediately move in you'll have a tough time convincing the IRS that your intent was to use for investment.  But you changed your mind as soon as you walked away from the closing table :). If you were to do that it does look like your intent all along was to buy your next primary residence.

    There's ways to accomplish what you want.  You just want to satisfy the demonstrable intent part of the 1031.

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  • Jared MontBlanc
    OP
    Investor · Pleasant Hill, CA · Member since 2017 · 37 posts · 5 votes
    5y

    Thank so much, Dave. That helps

    1Reply
  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    5y
    Originally posted by @Dave Foster:

    @Jared MontBlanc, Almost everythings on the table for you!..  If you immediately move in you'll have a tough time convincing the IRS that your intent was to use for investment.  But you changed your mind as soon as you walked away from the closing table :)...

    There's ways to accomplish what you want... 

    Agree. You just have to demonstrate that you are either a) an investor or b) a woman. Both are known to change intentions instantly. ;)  

    1Reply
  • Jared MontBlanc
    OP
    Investor · Pleasant Hill, CA · Member since 2017 · 37 posts · 5 votes
    5y

    Ha!  Thx for the reply Michael, much appreciated 

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