Can I 1031 exchange a condo and move into the replacement property?

November 23, 2005

From:  Lenore
Date:  Sat, 15 Oct 2005

I have a question I am hoping you can answer.

Prior to marriage, I owned a condo that I occupied. My husband and I moved into a single family home. The condo's been rented now for about 15 years. If I sell the condo and 1031 exchange it, can I ever occupy the property I exchange to?

We would like to retire in 2-3 years, so we would like to rent the condo until retirement. Then we would like to sell our home and move into the exchanged property.

Can we do this?



Date:  Mon, 07 Nov 2005

Hello Lenore,

I think the transaction should be adequately "seasoned" after two or three years of renting it out, so you can probably do this.

There are no firm rules about this situation. If the property you are receiving isn't deemed to be "investment property" but "personal use property", the exchange doesn't qualify. The IRS could raise this argument in an audit.

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.

Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+
Our Blog
© 2018

Subscribe to Michael Gray, CPA's
Tax & Business Insight

We respect your email privacy