Convert a 1031 Exchange Property to a Primary Residence

What are the requirements to convert a 1031 exchange replacement property to a principal residence combining Section 1031 and Section 121 of the tax code to defer taxes?

[melissa-qutf]

Out of all the videos I've watched on 1031 this is the first one that explains this part of it so thank you very much it's exactly what I was wanting to know about

[atexan]

Thank YOU! You have informed me more than anyone out there. Thank you!

[jdmxxx]

Amazing video. In one viewing I got perfect clarity on the topic. Thanks and well done.

[softailryder]

Always wondered about this exact example! Thanks!

[Eaglejake]

I learned a ton. I appreciate the use of the erase board. Great technique when explaining this concept. I think I got it!!

[Ed-zjvu]

Great video. You answered all my questions. Thanks

[adamwiggins]

Thanks for these videos Mr. Holloway. The series was very informative and you made everything easy to understand.

[GayJesus]

Easily the best explained video about 1031s that ive been able to find. Thanks for the time and info!

[sandiegobookscout]

Thank you. You clarified it all very well.

[philatwan]

This is a very delicate and difficult question – especially when it comes into a Tax Audit. Generally speaking, this is a decision in which only a license tax accountant or attorney can give or make; and NOT you or I.

The following is what both the spirit and the letter of the code seems to indicate.

It is possible to convert an Exchange property into one’s principal residence after 2 full years of renting; but at the time of the Exchange. The IRS expects a taxpayer to Exchange and acquire a “Like Kind Investment Property”; to HOLD for INVESTMENT with no intent to convert into personal use.

However, life can certainly change with no warning; i.e. illnesses or disabilities, perhaps financial hardships, or even family changes (I.E., such as death or divorce). These unplanned or unexpected or unforeseen changes may be a cause for conversion for personal use,

I hope this helps clarify the subject.

[buyerofsorts]

Wow, that was good stuff! Thanks for the video! :)

[tessjones]

Thank you. I am considering doing this and was not sure how it worked. Great instruction.

[david]

7:30 the look when my clients ask if they can use a 1031 when selling their primary residence😂

[philatwan]

Further more, the code specifically states that the replacement property needs to be purchased as "Like Kind", which means no intent to convert or move in.

[cristinacruz]

our PR title is no longer under the FLP title. It was changed to Living Trust 4 weeks ago,

[kevinfarrell]

1031 doesnt have to be equal or greater value. It can be any amount, its just that you would be on the hook for cap gains tax for the difference. Also it can be multiple properties not just one.

[TonyPuppets]

I believe he forgot to include the number of years it was a rental prior to the 1031 exchange. That would drastically change the percentages mentioned.

[cristinacruz]

My husband and I formed a FLP. A few of our properties title was under our FLP. Our residentail property which we lived for over 25 years was not. The residential property was under our personal names Two years ago, we sold one FPL property which was a rental. We exchanged this FLP property to buy our residentail property, so we stayed as renters. If I sell this residentail property ( PR) to take advantage of the tax benefits under this 121 tax code, can we claim our past years of stay as part of the 5 year requirement?

[danw]

My question is once you are living the the stepped up house as a rental - in theory you should be able to deduct/itemize any repair costs, improvements, and depreciate it if it is in the titled name of the LLC. Is my understanding correct?

[chinhtran]

Thank you for the education, it is extremely valuable. I have a question that hopefully you can answer. I purchase a rental in California in 2019 for $470, sold it for $569K and I did a 1031. I want to my a million dollar home with a partner where the partner will own 30% which is 300K and I own 70% which is $700K, is this possible to do this?