Many people who live in Minnesota consider moving to a warmer climate as they get on in years. Many of these taxpayers wonder if they can sell a rental property in Minnesota and 1031 exchange into a new property in a southern state that they intend to move into at some point.
1031 Exchange State of Mind Matters
In any 1031 exchange, both the relinquished property that you sell and the replacement property that you buy must be held for a qualified purpose of investment or for use in your trade. So initially when you buy a condo in Florida or a townhome in Arizona, those properties in your mind have to be held for investment or business purposes. A good way to do that would be to rent out that new property for a minimum of 24 months to substantiate the fact that you are holding the property for investment or business use.
If you are willing to rent your replacement property out and show that you’re holding it for qualified purpose, you can do a 1031 exchange into it. Your long-term intentions may be more indeterminate. You may choose to make that rental property your personal residence years down the road after the dust has settled on your exchange.
What does not work is selling investment property and immediately buying a property that you intend to use for personal use. That is antithetical to holding for qualified purpose in a 1031 exchange.
CPEC1031, LLC
Are you considering a 1031 exchange for your next sale of commercial real estate? Well then you’ve come to the right place. The qualified intermediaries at CPEC1031, LLC are here to help! We have over twenty years of experience working on like-kind exchanges of real estate for clients across the United States. Our team can walk you through the entire 1031 exchange process and ensure you are ready when it comes time to close on your property. Contact us today at our Minneapolis offices to learn more about how we can help.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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