1031 Exchange or 121 Exclusion Out of Duplex?
Hello BP,
I am doing my due diligence and researching to buy a duplex and house hack.
Specifically, it would be a Single Family Home with a detached Granny Flat, purchased with an FHA Loan.
My plan is to live in one of the units, (most likely the granny flat) and rent out the main house, (either long term or airbnb).
My question is when I decide to sell, what are my options and what should I be aware of in regards to 1031 exchange and 121 exclusion options. I understand I need to occupy the property for 2 years to qualify for 121. However, can I sell and take advantage of the full 500k tax-free gain (I am married). Even though I lived in one unit and rented out the main house?
Also, my goal would be to buy another property with the proceeds of the first one. I have read a 121 and 1031 can be combined and prorated based on the value of the unit rented out versus occupied. But I'm a little confused on the specifics..
The upleg / 2nd property would most likely be a Fourplex where I occupy 1 unit. I want to be prepared and educated about my options in advance.
If anyone has experience or can shed light on this issue/situation I would be very grateful!
Thank You!