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Buying or Selling a Home/1031 purchase of house
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Question
I am selling a rental house purchased in 2001 that I never lived in. I have an
exchange co. handling the funds. I am looking to buy with the 1031 handled
funds new property in California that will be my residence with a rental on the
property. Can I also live in the property? What are the rules for this?
Yes, Jean, but you will need to prorate the percentage of the property for the amount that you live on. That is, you will be treating the income part as long-term income. Your residence portion will be subject to cancellation of taxable income every two years up to $250,000 in profit or $500,000 in profit if you are married and you file your return with your mate jointly.
The income portion must be depreciated annually and you may deduct expenses, property taxes
To make sure you do this correctly, you should consult with a CPA or other tax expert who is familiar with real estate. I do wish you well.
Dick Dennis dick@dickdennis.com
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Answers by Expert:
- Dick Dennis
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- Sharon Huneycutt, Realtor, Associate Broker, GRI, e-PRO
- CJ Brasiel
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- Kerrin Kostelic, FL Broker Associate, GRI, AHWD
- Tim Norris
Dick Dennis
Expertise
With more than 41 years as a real estate broker, I can solve most any problem presented. If I can`t, I do my research. Problems with mortgages, trust deeds, foreclosures, odd ways of conveying titles. Most any good Realtor can answer questions satisfactorily, but I answer questions that most cannot. Also, ask about my hard-copy newsletter, The Landed Gentry. It can also be sent to you via PDF.
Experience
Solving real estate problems for 37 years.
Organizations
National Association of Realtors
Publications
Publishes The Landed Gentry, guest writer in Who's Who in Creative Real Estate, First Tuesday, Financial Freedom and many newspapers
Education/Credentials
e-Pro Realtor, Certified Distressed Property Expert, Who's Who in Creative Real Estate
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