1031s

[Tax Man]

My property to be sold qualifies. My question is about sale of my primary residence AFTER I do the 1031 on the OTHER property. I don't think the rules allow an immediate moving in to the new property which was exchanged from a second home/business property. If my new address of record is immediately the property which I just bought with a 1031 exchange won't I be liable for Capital Gains Taxes? It would have immediately become my primary residence.

What did your CPA say when you asked?

[Arthur Rubin]

Without checking the regulations and other interpretations, 1031(h)(2)(B)(ii) strongly suggests that the acquired property would be considered personal-use property, at least for the purpose of this section, so gain on the relinquished property would not be deferred.

[Arthur Rubin]

Without checking the regulations and other interpretations, 1031(h)(2)(B)(ii) strongly suggests that the acquired property would be considered personal-use property, at least for the purpose of this section, so gain on the relinquished property would not be deferred.

My tax guy is on vacation. If I read that correctly, after I rent out the newly acquired business property for two years and then move in, I'm cool so far as gains taxes on the original business property?

More or less, although if they (the IRS) see an intent to move in after two years (remember, this is an open forum, and IRS agents are not prohibited, or even discouraged, from reading it), that might make the property personal-use property (voiding the 1031 exchange) even if it does have apparent business use during those two years.