Is it possible to 1031 exchange your proceeds from a duplex into a single family home and then move into the home? Or do you need to rent the home first? That’s a great question, and our topic for today’s article.
In order to qualify for Section 1031, the new replacement property must be held either for productive use in a trade or business or for investment.
The U.S. Tax Court has said in a case called MOORE v COMMISSIONER, T.C. Memo 2007-134, May 30, 2007, that “personal use” such as a home or second home is antithetical to holding for the qualified purpose of investment/business. Renting the new replacement property for a substantial period of time would be prudent in order to satisfy the requirements for like-kind exchanges. See also IRS Pub 544 at page 12.
1031 Exchange Company in Minneapolis, MN
At Commercial Partners Exchange Company, we work with clients across the United States on their like-kind exchanges of real estate. For the past twenty years our qualified intermediaries have been advising clients, preparing documents, and answer questions related to section 1031 of the Internal Revenue Code. Contact us today to learn more about our like-kind exchange services and set up an appointment to chat about your exchange. You can find us at our primary office in downtown Minneapolis.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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