Like Kind Exchange

[Greta]

Husband and wife have LLC with two rentals which they are selling. They wish to buy a personal second residence. Does the new purchase qualify for a like kind exchange. Would it have to be in same LLC name (they wish to close out the LLC).

[Terry53029 · Accepted solution]

A 1031 exchange is specifically intended for investment or business properties. Personal properties are not eligible

[abctax55]

Rental property for a personal residence - even if a second home - would not qualify.

They would have to rent out that property for a while (the exact time line isn't defined in the IRC).  They could then go wink, wink, nod....well, despite our ORIGINAL intention for this to be a rental property we've decided to make it a personal residence. 

Intent at the time of the exchange is important.

[Terry53029]

The problem with doing that, is you will lose some of your section 121 if you decide to sell the personal residents in the future

[abctax55]

True... plus it's a slippery slope (that intent thingy...) 😉