The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.
Turning a 1031 Exchange into a Private Residence, Part 4
Question:
I’ve recently sold four building lots in Florida as we were planning to build there. I would like to use the proceeds to buy a home in Arizona. I’d prefer to NOT pay taxes on the gain as I’m using this for a new home. Is this possible? Regards, David.
Answer:
There are several issues here. First, you said you’ve recently sold: unless you hired a Qualified Intermediary and his or her papers were available at settlement, you cannot do a 1031 exchange, because you have constructive receipt of the proceeds. If this were not the case, you would still have problems exchanging into a dwelling into which you were going to live. You can buy a house with an exchange and rent the house for two full years, and then move in and not pay your capital gains.
About Marilee: Role of Marilee Hill, Registered Representative (RR)
When you’re going to do a 1031 exchange deal, there are lots of things to consider – with a securitized property you need a licensed FINRA professional with either a Series 22 or Series 7 license, and your professional needs to understand how to work with the multiple stakeholders involved in the business. You also need to know about the crucial role of a qualified intermediary. Marilee Hill, with 20 years experience in the business, provides this free advice to clients to help them get started rolling the ball up the hill for a 1031 exchange deal.
