Converting private residence to rental and using 1031 exchange
I'm new to Bigger Pockets and have a question I haven't seen addressed. I am a 15% owner of an LLC that is selling a manufactured home park. Can I do a 1031 exchange for my own private residence that I am converting to a rental? So I would purchase and move in to a new home and begin renting our current. Then the LLC (via a "swap and drop", structured so just I am responsible) would purchase/exchange (at FMV) our current home as a rental/investment property. The benefit for me is that I could retain the property with no current tax cost because the gain on the sale/exchange (up to $500,000, which is about what we have on ours) is excluded under Sec. 121. Then I would just continue to rent the house at the stepped up basis. Here are the only articles I found that seem to indicate I can:
https://www.thetaxadviser.com/issues/2008/jul/convertingaresidencetorentalproperty.html
- Under second section called “Sale to Controlled Entity in Lieu of Conversion”.
https://www.realized1031.com/blog/you-can-do-a-1031-exchange-on-a-primary-residence-heres-how
- Whole article.
Any insights would be appreciated.