Capital Gains On Duplex,owner Occ.
Hi folks, newbee here. I have a duplex that i want to sell, I lived in it to beat the cap gains,do you pay half the gains, or none. I assume its half @if so can i like kind the payable half on another 
thanx for your input....craig 
Your profit on the sale is allocated between the residence unit and the investment unit. The residence unit is eligible for the Section 121 capital gains exclusion. The investment unit is eligible for a Section 1031 tax deferred exchange.
NewKidInTown is right on the money. The allocation is usually done based on square footage, but there are other methods, so you should consult with your tax advisor for specific planning.
[addsig]
thank you,
I am in the opposite boat.....I have a single rental condo that I am selling. I want to buy a 3 unit in another state with the proceeds from the sale. (I can buy it free and clear, GOTTA LOVE THE BOOM IN SAN DIEGO!!)
Assuming I am correct that I have to re-invest all of the proceeds to avoid capital gains, Can I consider the full amount that I pay for the multi unit as re-investment if I live there?
No, you can't dontaskwhy.
I assume you are contemplating a 1031 tax deferred exchange. You are not allowed to use exchange funds to acquire your primary residence.
I understand I can't use them to acquire a primary. I already have a primary. Once I buy the multi-unit as an investment property, I will sell my primary and live in the multi-unit while I look for land to build another primary on.
Does this work? If I sell my primary and live in the rental for 12 months, doesn't it become my primary (partially)? OR, is it that once you do a 1031, you can never make one of those properties a primary?
You are planning to buy a three unit property, with one unit reserved for your personal use. You can not use a 1031 exchange in the way you describe to acquire property that you intend for your personal use.
Bill Exeter may be able to help you structure an exchange where you contribute personal funds to the residence unit portion of the property acquisition, with exchange funds applied to the rental portions of the acquisition.
You are making me smarter by the minute. Let me put this out there. I have a primary residence. I am going to do a 1031 to sell one rental property and purchase a couple more while still maintaining my primary residence. About three months after that, I am selling my primary and moving east. Can I live in one of my rental units while I am waiting for my new primary residence to be built? Does this negate the 1031 exchange?
Questionable. Perhaps if you pay rent in an arms length leasing arrangement you can make it work.
If you are paying rent anyway, why not just rent something else and keep your rental unit occupied with a paying tenant. The income from your rental and the cost of your rent should cancel each other out without running the risk of compromising your exchange.
Contact Bill Exeter for specific details. He is an exchange professional.
Thank you, how do I contact Bill?
Never mind. I read your other post. That is great news about the 5 year stipulation.[ Edited by dontaskwhy on Date 01/03/2005 ]