All Forum Posts by: Patricia Galea

Thanks Celia, this is very helpful info.  

got it, thank you. 

Thanks Rick, 

I am also considering renting out the front house (for a couple years) so that the entire property can eventually be 1031 exchanged. 

Thanks Dave, 

Well, it’s great to hear I can apply both tax rules here. 
Can you please elaborate on how my CPA would "allocate the ADU". Does this pertain to giving the ADU a value? If so, is it based on rent income it receives? Cost to construct it? A price per square? Note, ADUs are still relatively new here (although already popular) so appraising them is a bit more nebulous.

thanks again,

Patricia 

Thanks for your responses. I have significant capital gains on the property because I’ve owned the main house/land for many years and the property value has appreciated greatly (yay LA). 

Given this, the best tax option is to do a 1031 exchange. I just need to know if this property qualifies for that because I live in one unit. (I have other MF investments so 1031 is not new to me). 

I built an ADU in LA and live in the front house. The former garage is now a single apartment and has been rented out to my tenant since 2021. the ADU is legal - was built with all the permits and has a CoO - and has its own separate address. (CoO is critical in LA).

Questions:

1. Can I do a 1031 exchange on this two unit property if I live in one of the units?  

2. If so, when does the 2 year clock start? I assume it's when the ADU was first rented out.

3. I am renting it out as a furnished long term rental (more than 31 days but less than a year), with back to back tenants.  Not sure if this is an issue.  

My goal is to 1031 exchange this into a 3-4 unit property where I occupy one of the units.

Thank you for your guidance.  

I own a house in LA (zoned R2) and built an ADU in 2022. It has a CoO (certificate of occupancy) and a unique address. I have rented it out for the past 1.5 years. I own other "standard" MF properties via 1031.

Questions:

1) Isn't this a legal duplex given that it has a separate address and CoO?

2) I live in the front house and my tenant lives in the ADU. Can I qualify for a 1031 exchange?

3) Does the 2 year clock start when my tenant moved in?

Thanks so much,

Trish