Can one do a 1031 exchange to purchase a multifamily property (2-4 unit) that will be owner occupied? I know it would be considered a personal residence but it is also an investment property. Gray area?

Thank you for all the help!

1031 must be like for like.  If you are purchasing with the intent to live in it as a personal residence, it would not qualify.

IF you purchased it as an investment property and later down the line converted it into a personal residence, there are ways to do that.

However, my guess is that you want to purchase it as a primary residence in order to have a cheaper cost of entry??  That would be a no-go.  I don't think there's anything gray about it.

@Michelle Bright , You sure can.  However you'll want to pay attention to valuations and how space is allocated between your residence and the investment portion.  @Cara Lonsdale is absolutely right.  You can't use a 1031 to purchase your personal residence.  But you can use it to buy the other investment units.  And type doesn't matter as long as it is to be used for investment.  

If you are selling a property for $300K and want to buy a 4 plex for 400K and live in 1/4th of it then that would be fine.  Because you are purchasing at least as much investment real estate as you sold (3/4ths of the 4 plex or $300K).

It's actually a brilliant house hack strategy to get into a small MF most efficiently.  In many cases you can even get very preferential financing on units up to 4 in size.

Let's switch it up. What if I have a 4 bedroom property where I use 1/4 as my personal residence and the other 3/4 is rented out. Could I buy a 4 unit MFR as long as 3/4 of the purchase price is equivalent to 3/4 of what I sold my previous property for?

Just realized that my example is pretty much what was previously stated. Can't delete on phone app so I'll do that later.

Thank you both for your response! @Dave Foster that is interesting and very creative! I ha not idea that could be a possible strategy. I plan on talking to my lender about our options today. We are looking to purchase or their property sometime this year. We love our professional careers and we are on the path of purchasing one property a year to reach our goal of financial freedom.