Yet Another 1031 Exchange Question
I own a townhouse I lived in for a few years and then rented out for a few years and has subsequently been vacant for a month or two. A Baby is on the way so it is time to upgrade the primary residence but I need the capital from the rental so I am selling it.
Is there any way I can roll the profits into my new house in a 1031 exchange. I understand the concept of like-kind exchanges but as always -- people are telling me that there are loopholes. Any suggestions you could offer would be greatly appreciated.
Thanks,
Brian
p.s. I apologize if this topic has been rehashed scores of times but I am not able to search the archives
Quote:Is there any way I can roll the profits into my new house in a 1031 exchange. I understand the concept of like-kind exchanges but as always -- people are telling me that there are loopholes.Brian,
There is no loophole that will allow an upgrade to your current primary residence to be done under the 1031 exchange umbrella.
Brian,
If you have lived in the townhouse for 2 of the last 5 years, check with your accountant on whether or not it falls under the primary residence capital gains exclusion ($250,000 single, $500,000 married). It is my understanding that the rule is a full two years, but they dont have to be the last two years.... Just a thought......
Good luck
Yup - I called a tax accountant and that was the story he gave me. It is close but I qualify. Thank god......
Brian
Just in case something happens and you can not sell the property in time, the requirement for the capital gain exclusion is that you own and live in the property for at least 24 months out of the last 60 months and the 24 months does not have to be consecutive. So, if you miss the deadline, you can always move back into the property in order to establish the 24 months. It has to be a total of 24 months.
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