FHA Loans and 1031 Tax Deferred Exchange

[Isstad Rashadeem]

Good Morning BP family,

I found myself entangled in loopholes this morning as I finished drafting my most recent Real Estate 5 year plan. I recently received some advice about forming my strategy as a beginning Investor in Real Estate from some seasoned winners in a discussion. After mulling over different options and hours of debating with myself about multifamily housing, I realized that it is here, on Bigger Pockets, where I better seek shelter from my newbie ideas. 

Goal: I would like to potentially trade my single family primary residence (FHA Loan) that I was intending to rent, and I would like to trade it under a 1031 exchange for two multifamily properties, one of the multifamilies will be my new primary residence.

So here are the questions:

1. Would my sfr qualify if it was never rented?

2. My understanding is FHA's have a period that you have to be a resident. ----- Am I allowed to trade for more than one property property coming from this type of loan? And If so does one of them have to be a different type of loan with different parameters?

3. Is it possible to 1031 trade for two separate FHA properties, one under each person that is on the original loan without running into IRS issues?

If you someone could point me to the right professionals direction that would be awesome! 

Because I'm not sure if I should be contacting a tax specialist, a lawyer, or a my mortgage company that I have the current loan with.... or all of the above.  

[Dave Foster]

@Isstad Rashadeem, Accepting the FHA loan established that property as your primary residence until you change the intent and use of that property. 1031 exchanges are only for investment property.

So You're options really are

1. Sell that house after living in it for 2 years out of the previous 5 and take the first $250K ($500K in profit) tax free.

2. Live in the house long enough to fulfill the FHA requirements and then change the use of it to become investment. At this point it probably would be best to rent it - both for income and to cement your use of it as investment if ever questioned. Then you could 1031 it after than any time within 3 years of moving out (so you have still ived in it for 2 out of the previous 5 years) and you could do either a primary residence exemption, or a 1031 exchange, or both.

3.