Delay taxes, exchange rentals for residence? - Posted by Jim

Posted by dealmaker on March 13, 2006 at 07:37:19:

Well, the good news is that the cap gains rate is lower now than in the past, the bad news is that 1031 (like kind) exhanges are just that LIKE KIND. So it’s investment ppty for investment ppty, not investment ppty for personal residence.

Or you could do what I did, 1031 out of rentals, into another (carefully selected) “rental”. After a minimal time of being a rental (it was on 3 year’s tax returns, but not rented for 3 years) I moved into it. Now happily retired in it.

Not sure about the tax consequences of borrowing since I NEVER borrow money. With over $1MM in equity I’m not sure why you would want to either.


Delay taxes, exchange rentals for residence? - Posted by Jim

Posted by Jim on March 12, 2006 at 22:02:08:

I have 8 units that I’ve owned for about 10 years, with over $1 MIL combined equity. I am retiring from the military and buying a new home for $500K. I can’t afford payments on a large new loan like that, so I’m planning to sell 2 or 3 of the units to pay $300k towards the new house. ($300 down, owner will carry $200k). Is a 1031 exchange allowed for selling rentals to buy a primary residence? There will be no debt relief, as the new $200k loan will be larger than the combined current loans for these 3 properties.
Or is there any other way I can delay the capital gains taxes?

Also, if I borrow money against the rentals to use for the down payment (if I can’t sell the rentals before the closing date), is that money immediately subject to capital gains taxes also?
Experts only please! Thanks for the help!