1031 Woes Going Into Hawaii

[Katrina Cabral]

I may have managed to find a buyer for my Georgia SFR and get it sold 'before' I close escrow on a condo in Hawaii. So, I could potentially do a 1031 exchange. Crazy question but I'm wondering if it makes sense to do it and if it's even possible given all the variables. I 'think' that one of the rules with a 1031 exchange is that you can not live in the place for some number of months. The new condo in Hawaii needs a lot of work and I plan to move in while making the improvements. The good news is that the place that I'm buying is actually two units that were merged into one large unit and I plan to revert them back to two units. So, wondering if this would provide a loop hole?

Also, I'm debating if I still want to do this whole land lording thing anymore. However, the ability to write off the cost of improvements is tempting, right? The likely hood that I will rent the unit down the road is a high one especially given the location. My expectation is that I will live in one unit, and keep the other unit for friends and family and occasional vacation renters. Would love to hear your thoughts.