Typically, a taxpayer’s primary residence does not qualify for 1031 exchange treatment. There are, however, various exceptions to this general rule.
If a portion of the primary residence or second home is either held for investment or held for productive use in a trade or business, then that portion may qualify for a 1031 exchange. A taxpayer may have a split transaction whereby a portion is subject to 1031 tax-deferral and a portion of the property is subject to the personal residence tax exemption under IRS Code Section 121.
A taxpayer may vacate his or her primary residence and convert the former residence into a property held for investment or used in a productive trade or business. The converted property should qualify for a 1031 exchange, although it is not clear as to exactly how long the property must be held for investment or used in a productive trade or business in order to qualify.
Strategic 1031 Exchange Advisors, LLC, a Georgia limited liability company, is a qualified intermediary for 1031 exchanges only. It is not an accounting firm, law firm or registered investment professional and therefore is not qualified to give accounting, tax, legal or investment advice, and, further, cannot act in an agency capacity on behalf of its clients. This website is for informational purposes only and does not and is not intended to constitute accounting, tax, legal or investment advice. We advise you to consult with your accountant, attorney and investment professional on all matters related to your exchange.