Upgrading to New Purchase (Investment or Residence)

[Pixel Rogue]

Hello everyone,

We are considering purchasing another home nearby. The place is similar to our own (same builder, similar layout etc.)
If we purchase, the home would need some serious upgrades that will take time.

OPTION 1:  Move into new place, rent out of current home.
We are comfortable moving into the new place, renting out our own home. This allows us to do a fair amount of the work on our own, on our own time, and we are comfortable living through upgrades.

OPTION 2: Stay in our current home, rent out new home. 
We may find a renter for the home at a lower-than-market rate. There are some upgrades we can complete while the tenant is in the unit (projects that you hire a contractor for and they can get the work done in a day or two) but others that are larger and take time to complete. 

Here is the rub:  Our preference is to actually move into the new purchase, rent out our home - HOWEVER - we are not clear how this might work when it comes to writing off expenses. We would want to live in the place (deal w/the drywall dust, painting and all) and yet want the write off the expenses. How can we approach this scenario where living in the new place would be considered 'primary residence' and prevent writing off expenses?  There might be clauses, time periods, special conditions...anything that would help shed light or help plan the right steps?