1039 Questions and purchasing

[Samantha Chacon-Johnson]

Hello all, 

I am seeking information about selling our duplex that we have house hacked and doing a 1039 exchange. For context we bought it 3 years ago and we are currently looking for another one that fits our needs outside of Eugene and we plan to house hack again. 

Our plan is to buy another one and house hack it too. We don't need to sell the first one to buy the second one. My question is: how long can the money be in a 1039? Do I have to purchase something in a certain amount of time to avoid capital gains and taxes? But I am unsure how long the funds can be in a 1039. Can I wait 2-4 years? 

There are several reasons why I want sell our first one, but the main one is tenant landlord laws in Eugene are heavily in the favor of the tenant. 

Thanks! 

[Dave Foster]

@Samantha Chacon-Johnson, You've house hacked that duplex for the last 3 years.  So the percent of the sale attributed to the side you lived in would give you the first $250K ($500K if married) of profit tax free.  You get that regardless.

Using a 1031 exchange allows you to indefinitely defer paying the tax on the gain attributable to the other side that was used for investment.  Others have spoken extensively about the tight timelines which have you concerned.  

Everyone's got their own tolerance of the unknown.  But one thing you might do is find the new property first if you can.  Get it under contract if you want.  And Then sell your old property.  If you negotiate an extended purchase date you could still make the 1031 work.  And that might lessen the time angst.