1031 Tax-Deferred Exchange Question?

Question

Hello and thanks in advance.

Scenario:

"John" is a first time home buyer (primary residence, lives alone, 30-yr traditional loan) who may want to move in a few years. Call it House A.
John wants to move into another property (House B) and "convert" it to his primary residence while renting out House A.

Questions:

Can House A be deemed a rental property? If so can John then use a 1031 tax exchange and exchange House A for another rental property (House C) whenever he wants to make the exchange?
During this time John is living in House B as his primary residence.

I think the answer is yes but I am still wondering. Also if anyone has had experience doing this could you please summarize the process? John and I are in similar situations ;) and others experiences would be insightful. Thanks.

Answer 1

Here is the NAR website for you so you will understand the process a little better.



http://www.realtor.org/libweb.nsf/pages/fg408



I have done many 1031 exchanges being in escrow but according to some people I may not give the ritght information to you so that is why I gave you the above website.

Answer 2

The question is "CAN John do this..." the answer is "Yes, he CAN do this."



But he really doesn't have to. If he lived in "A" for at least 2 of the last 5 years, he can sell "A" and $250k of his profit is tax free. (you didn't say... it's not like a $2Million property, is it?)



Tell "John" to do this... and since you're in a similar situation, you do it too.



Buy "A". Live in it at least two years. Then buy and move into "B". Sell "A" any time before the next three years are done, and when prices are up. Buy "C" when the price is down.

Answer 3

D, I have to tell you that you need a professional to talk to about this. These folks only know a little about something and aren't a really good source for this kind of information. Unless you talk with the guy from Mexico and Missouri. Those two seem to know their stuff! Check the real estate section and look at th people who answer, you'll find em' !

Answer 4

short version--in case you have a employer asset which you quite prefer to commerce with somebody who has a like type asset of roughly equivalent fee, you're able to do a 1031 substitute there are multiple obstacles which you would be able to desire to be conscious of approximately, and that if any money is r'cd that is seen 'boot' and is taxable you apart from mght extremely desire a sturdy facilitator to manage the commerce good