1031 Exchange & Taxes
Hello all,
Since my husband and I are house hacking. I’ve been told that we can only do a 1031 exchange for part of the proceeds, because it’s our primary residence.
Also, from the proceeds how much should I told back for taxes and depreciation recuperation? I am thinking it might be okay, if we sell our current duplex and buy a more expensive one. Thanks! Samantha
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- Qualified Intermediary for 1031 Exchanges
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@Samantha Chacon-Johnson, That's correct. On your tax return, you own two units that are taxed differently. One is the primary residence. If you lived in that as your primary residence, then you can sell and take that % of the sale (64%) of the gain tax-free (up to the $500K limit).
But you can also do a 1031 exchange on the other unit. And defer all the gain and depreciation recapture from that portion.
The best of all worlds is available to you - some tax-free, some tax-deferred - NO tax on the transaction.
- Dave Foster
