how to use 1031 exchange for primary residence:

Google AI answer:

A 1031 exchange can be used for a primary residence in a few ways, including:
  • Converting a primary residence to an investment propertyLive elsewhere and rent out the former residence for at least two years. 
     
  • Selling a duplexIf you live in one unit and rent out the other at fair market value, you can use the primary residence exclusion for the unit you occupy and use the 1031 exchange deferral for the other unit. 
     
  • Converting a rental property to a primary residenceMeet the IRS's "qualified use" requirements, which include:
    • Not making any custom changes to the rental for your use 
       
    • Renting out the property for at least 24 months 
       
    • Not living in the property for more than 14 days out of every 12-month period 
       
    • Renting out the property at the market rate 
       
If you convert a property acquired through a 1031 exchange into a primary residence, you'll need to meet the following requirements: 
 
  • Hold the property for at least five years before claiming a Section 121 exclusion on the sale
  • Live in the residence for at least 24 months to qualify for a Section 121 exclusion
You can use a qualified intermediary to help with the exchange process, which can streamline the process and reduce the risk of failing to meet the time requirements. 

 

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