1031 exchange funds into a vacation home/rental

[Stephen Jones]

BP,

I was hoping someone could answer a quick question for me. I have a large multifamily rental portfolio. Let's say I wanted to sell one of my 8 units and exchange those funds in a 1031 into a vacation home/rental (my portfolio is in the midwest). Am I able to do that since it's technically a "rental property?" Obviously I am trying to defeat capital gains here, but my wife and I wanted to start searching for a vacation home here soon and would prefer this route if possible. Any feedback would be greatly appreciated! Thank you!

[Matt Devincenzo]

Quote from @Matthew Masoud:

From what I understand it needs to be a "like-kind" property.

That means multifamily to multifamily, retail to retail, single family to single family.

I'd call a 1031 intermediary to ask specific questions, they won't charge you for a conversation. 

Like kind means real property to real property. So MFR to land is fine, as is MFR to retail etc. It doesn't need to be the same zoning use.

So then MFR to personal vacation use is a no go...but MFR to your new STR would work. So you get your STR going and then at some point could use it as a personal vacation home after meeting the investment req'. I'm sure @Dave Foster can provide more insight into how to make this an effective strategy.