All Forum Posts by: Patrick Fricchione

Michael, thank you for your insight. To add more clarity, My intent was to do the 1031 and rent it for 2 years, demo and rebuild, do the CSA and rent another 2 years before considering to make it a personal residence. I just wasn't sure how the CSA and accelerated depreciation would be impacted should I convert it to a personal residence 2 years after the rebuild.

Good thought regarding the basis. Thanks for the input.

I thought the same regarding the CSS and primary residence. I wasn’t quite sure on the 1031 if I did the rebuild and waited a year or two to qualify for the accelerated depreciation while still under the 1031. Hoping for a creative solution, but doubtful.

I have been renting the property and thus the reason I'm giving it several years rather than waiting the proverbial 1 year and 1 day. Your comment mirrors what I was thinking. I will need to discuss with my Exchange professional. Thank you for the comment.

Quote from @Greg Scott:

You can't take depreciation deductions on a primary residence.

I have a feeling that converting this rental to a primary will also unleash a huge tax bill in the form of depreciation recapture.  I'd consult a qualified CPA.

I have an investment property in an LLC acquired through a 1031 exchange. Should I decide to demo the property in 4 years and rebuild, can I do a cost segregation analysis and use it as a primary residence or will the 1031 disallow it? I hate to miss out on the accelerated depreciation with the CSA.

By now you can see the consensus is not to build, but buy an existing property. Cost of a new build will require a reasonable amount of money depending upon your location. You may still have to deal with a lender for acquisition and construction and then modify your loan assuming your dealing with a local bank. Never use all of your cash. Agree that a quad is better. Don't be in a hurry and buy the right property at the right price. New construction is not easy starting out. Good luck!