Want to sell home to tenant. Does 1031 come into play?

[Carole G.]

We own a home that we have rented out.  We are considering selling it to the tenant.  Does a 1031 come into play?  Are the payments considered income on your taxes?  

[Bob Okenwa]

The 1031 exchange (also called a like-kind exchange or a Starker) is a swap of one business or investment asset for another. Although most swaps are taxable as sales, if you come within 1031, you'll either have no tax or limited tax due at the time of the exchange as long as you identify a property within 45 days and then close on a new like-kind property in 180 days. 

I am assuming you are referring to the rental payments from the tenant, and yes that money is taxable on your income and is treated as passive income.