Best Options for Upgrading to a New SFH?

[Bob Asad]

If I live in a $600k SFH and have around 50% equity but want to "upgrade" to a $900k SFH, what would be the best option?

I was told by the bank that I couldn't do a 1031 because it's a primary residence, and 1031 are only for investments.

But I also don't want to sell and lose 20-30% on taxes (lived in the house for 2 years)

What's the best route?

Put 5% on the $900k SFH and rent out the $600k?

[Dave Foster]

@Bob Asad since you've lived in it for the two years you could potentially qualify for the 121 exclusion, giving you $250,000 of the gain tax free ($500K if married) like @Jeremy Ellis said. Another option if your profit is over that amount is to convert the property to a rental which would then qualify the property for investment use, Then do a 1031 exchange after a year.  But since you still have lived in the property for 2 out of the previous 5 years you could take  the $250,000 as well as defer the rest of  the tax in the 1031.