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Updated about 6 years ago on .
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Buy current primary residence with 1031 - then refi?
Hi there,
I am selling a rental property (H1) and would like to avoid paying capital gains. I would like to refinance my current primary residence (H2) using the profit and turn it into my next rental property. Then, I want to pull out equity from H2 to purchase my new home (H3.)
Can I:
- Move income from sale of H1 to 1031
- Refi H2 using that money to pay down loan amount.
- Take equity out of H2
- Use that money as a downpayment for a new primary residence H3
Now that I type it out it seems like some hoopla the IRS would not allow - but my brain won't rest until I ask the question.
Most Popular Reply

2 x Nopes.
Can’t 1031 in to a primary residence.
Can’t use a 1031 for a refi, only purchases.
A “creative person”, someone who didn’t post this idea on a public website, might suggest you could do a 1031 exchange in to a property (h3) that might someday, say more than a year later, become your new primary after it was a rental.