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Updated about 5 years ago,
1031 exchange followed by a move in?
If we sell rental property A and buy a similar rental property B, can we move into it after renting it for a while (say, 1 year)?
Let's say we sell rental property "A" in 2020 with 500K profit but do it as a 1031 exchange and buy a similarly priced property B. No taxes are paid. We rent B for a year then move in and live in it for 9 years. It appreciates significantly and we sell it in 2030 with 500K profit. Can we (a married couple living together in B as primary residence and filing jointly) get 90% of that 500K profit tax free (only 90% because we rented it for 1/10 of the time).
What happens with the 500K profit from property A? . Is it tax free?