Husband and I have a cabin that we built and filed for completion certificate date in July 2019, took a loan out to build as primary residence. We signed a contract to sell last month and it closes May 14, 2021. We will have 150K from the sale after. We want to reinvest but not sure what to do with the money. Normally we would build another house but the cost of material is way too high. Do we divide the money and buy several homes? Do we have to pay taxes if we reinvest, If so what is the tax we would pay on the money? Can we do a 1031 and if so do you have to invest the lump sum? Thank you for any help!
If it was a “second home” and not a rental property, it doesn’t qualify for a 1031. Since it wasn’t your primary residence you lived in for 2 years, then no section 121 exclusion. So, no way to defer/avoid the taxes.