1031 exchange


G

genetichealth

I am converting my primary residence into rental property,
and am wondering if I sell some of my other rental
properties, can I use the 1031 exchange rule to use the
proceeds to pay down the mortgage on my
was-primary-residence-now-rental-property.

If this isn't possible, we were also wondering if there was
some way to sell the current primary residence to ourselves
to start fresh and treat it as investment property.

Thanks!
 
Last edited by a moderator:
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P

Paul A Thomas

I am converting my primary residence into rental property,
and am wondering if I sell some of my other rental
properties, can I use the 1031 exchange rule to use the
proceeds to pay down the mortgage on my
was-primary-residence-now-rental-property.
No. That isn't even close to a like-kind exchange.

You can't defer the gains even if you used the proceeds to
pay down an existing rental/investment property.
If this isn't possible, we were also wondering if there was
some way to sell the current primary residence to ourselves
to start fresh and treat it as investment property.
Once again, no. You can't do a like-kind exchange with
yourself.
 
Last edited by a moderator:
D

David Woods

I am converting my primary residence into rental property,
and am wondering if I sell some of my other rental
properties, can I use the 1031 exchange rule to use the
proceeds to pay down the mortgage on my
was-primary-residence-now-rental-property.
No. You have to ACQUIRE a property.
If this isn't possible, we were also wondering if there was
some way to sell the current primary residence to ourselves
to start fresh and treat it as investment property.
You cannot sell something to yourself.
 
Last edited by a moderator:
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B

Bob

If this isn't possible, we were also wondering if there was
You cannot sell something to yourself.
But you don't have to sell it to yourself to convert it to
investment property. You can just move out and rent it. I
think your basis would be what you originally paid for it,
but any improvements made after you start renting it would
add to the basis. I'm not a tax guy, but I did this once
myself several years ago and it seemed to work! Subsequent
to that, I did a 1031 with that property for a more
expensive property with more annual depreciation.
 
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