Help me work through this 1031 scenario
As part of an inheritance, I am a 50% owner of a lake home in Minnesota. At some point in the near future, the other owner (who uses the property full time) is going to want to sell. My plan has always been to use my proceeds to buy an investment property once the time comes to sell. The property is worth about $300,000. Because of the inheritance, when I sell, I will owe a chunk of my $150,000 proceeds to the IRS.
It dawned on me this morning that this may be a good candidate for a 1031 (which I've done on a previous transaction). My thought is I could buy out the other owner and then hold the property for a couple of years and convert it into an investment (as a seasonal vacation rental - which there's a decent market for in the area). Note - the other owner is not interested in holding an investment property. Then after a few years as 100% owner of the investment property, I sell as a 1031 exchange to and trade from this property to a property in my target market (southern CA).
Let me know your thoughts/things I should consider. Thanks, Dale