1031 a multifamily u live/d in?

[Account Closed]

I just recalled that when in NYC i needed(?) to use an attorney to close on my long-term multifam flip (usually at 2 yrs owned/lived in) and usually the first words out of lawyers mouth was 'why don't u do a 1031 even exchange?' or something like that.

i never really paid attention to the particulars as to what and what can't be 1031, despite being in RE for a decade. or, i keep forgetting and too lazy to refresh.

 so what is it, i forget.. it has to be an investment property and can't be your primary residence? 

[Jesse T.]

Assuming you lived there for 2 years the tax treatment is more generous for your primary residence than it is for an investment property.  You won't owe anything on the gains if it is less than 250K and you didn't rent the property out.  This is a better deal than the 1031 which will defer the taxes on the gains.

I think the structure of the deal would be to treat your unit as a sale of your primary residence and the rest of the units would be in a 1031 exchange.  This would give you a little bit of flexibility in the property that you acquire since you could pull out the proceeds from your unit without a tax impact - however you need to make sure that all proceeds - cash and paid off mortgages stay in the exchange and are used to acquire the next property.

I would start off with an accountant who specializes in Real Estate taxes and then go to a lawyer to implement the 1031.