Will my tax-deferred exchange still be valid if I move in?

August 24, 2001

Subject:  Hello & question
From:  Paul Edmondson
Date:  Mon 13 Aug 2001


I am hoping you might be able to help me.

I have a rental house in San Diego which I have owned since the early eighties. Current FMV approx: 220K of which I owe 130K.

I do not want to live there.

What I want to do is exchange for something that I do want to live in.

The way I understand it is I must exchange for equal or greater value and loan AND it must also be a rental for at least 1 year. Then I can move into it? Then I must live there for 2 years before selling?I'm I right in my assumptions?

Thank you for your help! If there is anything else you think I should know about this could you please tell me?

Also, where do I find a "facilitator"? Is that a specialized real estate agent?

Thank you very much!!

Paul Edmondson


Date:  17 Aug 2001

Hello Paul,

You have basically recited the "party line" for an exchange followed by converting the rental by exchange to a personal residence.

Since the exchange is being made "with a view" of converting the replacement property to a personal residence, having the exchange allowed can't be guaranteed.

You should be able to get a referral for an accommodator through a tax advisor or commercial real estate broker in your area. Many title companies and some bank trust companies also offer this service.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

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