1031 Exchange + House Hack Multi-Family Using FHA

2 Replies

Looking at purchasing my first multi-family quadplex and living in one of the units for at least a year or so while renovating the others. Would I still be able to use FHA/conventional financing if I used a 1031 exchange on the purchase?

@Karen Rodriguez , It is the use of the property that is important not the source of the funds for the financing. When obtaining a 1-4 unit FHA loan you are in their words essentially purchasing two properties - a primary residence and an investment property but rolled up into one. Since you can use a 1031 exchange to sell and purchase investment property that works just fine.

The key is going to be the net sales price of the 1031 property and the purchase price of the MF.  In order to defer all tax you must purchase at least as much as your net sale.  If you sold an investment property for $300K and wanted to purchase a 4 plex for $400K then you could live in 25% (1/4th) of that property since you would have sold $300K of investment property and needed to purchase $300K of investment property.

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