Hi - I have a home that was purchased back in 2017 ($329K) under my name since my mother didn't want to put the house under her. She has been living there and she pays the mortgage and now only have about $70K left to payoff. That was never my primary resident. Back in Dec -2020, I bought a townhome (as my primary home) which I sold ( June 2022) due to having to relocate to another state and made $140K in profit, which I didn't have to pay any capital gains tax on since my husband and I moved to another state for work and that qualified us with $0 tax liability.
Now I'm planning to sell that home I purchased back in 2017, which currently value close to 500K, after netting out all the selling fees and paying off the remaining mortgage amount, I'm looking around $350K-$400K that I can use to repurchase as a rental property. With that being said, since that home was never my primary resident, and in the eyes of IRS, that home is considered as an investment property, I'm now liable for the Capital Gain Tax. Do you advise that I pay the tax now or utilize the 1031 Exchange to defer the tax liability?
Or the other option is to keep that home and rent that home out, this home is currently in NC and I currently live in WA. In WA there is no State income tax but in NC, there is. My goal was that to sell the 2017 home and invest that in another property like NV where they have good landlord "Friendly", No State income tax and low property tax.
