1031 exchange for one unit in a 2 family house.

8 Replies

Upon selling my valuable 2 family house in which I hold the deed , do I  qualify for a 1031 exchange on my rental unit (which was originally occupied by us but has been rented out for the last 5 years) as well as qualified to use  the $500K exemption from capitol gains tax on my residential unit? 

Thank you for any and all responses...... 

@Nina Phillips The 1031 exchange is an entire process that starts with the close of your sale.  But the intermediary for your 1031 has to be in place before your sale closes or you can’t do the 1031 at all.  So be careful.  It’s more than just something your accountant reconciles on your tax return

You would only qualify for the primary residence portion if you have lived in it for 2 out the 5 years prior to sale.

But if so then yes you could take the exclusion and  the investment portion would qualify for a 1021 exchange.

It’s a great plan  you get some tax free money and the rest is tax deferred.

Brilliant! Thank you both. I do live in one unit, it is half the size of the other. So therefore, i am entitled to taking a 1031 and 1021 exclusion if I handle the process correctly.

What a great website. Thank you!

whoops ! I realize that the 500K exemption is not called a 1021. And yes, I understand all the ramifications of the 1031 program. 

There is an unusual story to how my husband and I acquired our house. Is there a particular forum to use to post that story?