I sold a house with 10 acres of land in Feb this year, and made some profit.
Right now I'm selling duplex of mine, expecting to close within 1 month, should make a profit as well.
I just acquired a SFH and plan to start remodel it within a week.
My question is can I use the 2 profits I made and use 1031 Exchange for this new SFH's purchase & improvement?
When using a 1031 Exchange, the exchange must be set up and in place prior to closing on your relinquished property (property you are selling). The property sold in February will not qualify as this has already closed and you are in receipt of the proceeds.
The duplex could be included in an exchange. The proceeds of sale could be used to purchase the replacement property and used to improve this property by using what is called a Build to Suit or Improvement exchange.
However, from the sounds of it, you have already purchased / own the single family home that you are wanting to improve. In an exchange, you cannot invest in or improve a property that you already own, so it sounds like an exchange will not work for you on this project.
@Andrew Y. , The 1031 must be a sale followed by a purchase so you can't exchange into property you already own. And you must use the services of a qualified intermediary to complete the exchange and they must in place prior to the sale of your old property. So you're double whammied on this one - You've already sold one so it won't qualify. And you've already purchased your replacement so it doesn't qualify as a purchase.
There is a way to control your new property and add improvements prior to selling your old property and exchanging it called a reverse exchange. But it involves your qualified intermediary taking title to the new property and holding it while you improve it before your sale.
So the scenario you were thinking of is a non-starter. But you can still do a 1031 on the duplex and use he proceeds to purchase a totally different property.