1031 Exchange into an owner occupied Duplex/Townhome

[Armando Martinez]

I purchased a flip in September of last year for 69k and put about 20k into it (all cash). I am currently in contract to sell for 115k and looking at a profit of about 25k. I was hoping to 1031 Exchange into a Duplex/Townhome, live on one side and rent the other. I've seen mixed results about this but it seems like this is possible. The Duplex/Townhome price would more than likely be at the 300k mark or above.

I have also read that the entire amount of the gains needs to be invested in to the other investment property if doing a 1031 exchange. I just want to confirm that it would only be the 25k of profit needing to be rolled over to the other investment property?

[Natalie Kolodij]

Originally posted by @Armando Martinez:

I purchased a flip in September of last year for 69k and put about 20k into it (all cash). I am currently in contract to sell for 115k and looking at a profit of about 25k. I was hoping to 1031 Exchange into a Duplex/Townhome, live on one side and rent the other. I've seen mixed results about this but it seems like this is possible. The Duplex/Townhome price would more than likely be at the 300k mark or above.

I have also read that the entire amount of the gains needs to be invested in to the other investment property if doing a 1031 exchange. I just want to confirm that it would only be the 25k of profit needing to be rolled over to the other investment property?

Hi Armondo, 

Unfortunately you can not utilize a 1031 on a flip property. This is only utilizable on long term investments- IE: Properties intended to be held as rentals. If you can show that was the purpose of the property and hold it over a year a 1031 may become a possibility. 

How it currently is though I'm afraid it would not meet the requirements. @Dave Foster Can provide more insight.