Capital Gains Tax Planning | Principle Residence 1031 Exchange
If you sell a multiple-unit property which includes your primary residence, the sale may qualify for a 1031 exchange, and you may be entitled to the $250,000 exclusion on capital gains. Just treat each portion of the sale as a different transaction.
For example, say you sold a duplex for a gain of $500,000 (assume both units are evenly valued). A $250,000 gain would be allocated to your rental unit, and $250,000 would be applied to the unit that you live in.
If you lived in your unit for two of the prior five years, you qualify to exclude up to $250,000 on the sale of your primary residence, and avoid paying any capital gains tax.
To avoid paying taxes on the rental unit portion, you could purchase a replacement investment property that cost $250,000 or more to qualify for a 1031 exchange.
Would you like to try some property management software with that 1031 exchange?
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