Can you 1031 exchange a rental property for a duplex that is half personal residence & half rental property? The value of the rental property is close to the value of half of the duplex.
The sale of the rental might be $225,000 and the duplex might cost $500,000. The part of the duplex being rented out might be valued at $250,000, so the new investment property is valued higher than the sale price of the rental. So if all of the proceeds are used to purchase the duplex would there be any boot? Would some of that down payment need to be allocated to the personal half of the duplex, and create boot? Am I thinking about this the right way?
What if the 1031 exchange is written up as a purchase of 1/2 the duplex?
Could each 1/2 of the duplex be sold separately? If so, they 1031 one unit. They buy the other unit with a separate contract.
How much gain are we talking about? A $225K sale price is not a lot. There will be a lot of costs.
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