What is Capital Gain Protection on Owner Occupied Triplex

[Cj McDougal]

Hi, I have a triplex that I am considering selling in the next few years. Currently the triplex is all tenant occupied. I know that capital gains protection is $250k if your are single and $500k married and lived in the property 2 out of the last 5 years (California). I am single and wondering if i moved into the property would I qualify for the $250 exemption or would it be 1/3 of that since its a triplex? Just curious if its worth it for me to move in there for 2 prior to selling...of course I would have to rent my house out get storage etc...

Thanks

LilNomad

[Bill Exeter]

Hi @Cj McDougal, 

Contrary to popular belief, and what some write on the internet, you do not "have" to replace your debt.  You must trade equal or up in value, so the purchase price of your Replacement Property must be equal to or greater than your sale price of your Relinquished Property.  You must reinvest all of your cash (equity) into the Replacement Property.  The difference between the purchase price and the equity reinvested would either be new debt or new cash out of your pocket.  So, you could trade equal or up in value and reinvest all of your cash and then put additional cash in so that you are replacing debt with new out of pocket cash.  The majority of investors replace debt because they do not have cash laying around to use toward the purchase, but you do not have to replace debt.