Can a Taxpayer exchange relinquished property into a new primary residence?
No. The law is very clear that a tax-deferred exchange involves investment real estate (see question 2) being exchanged for other investment real estate. However, people sometimes change their minds and occupy properties they had originally intended only for rental purposes. If a Taxpayer eventually occupies the replacement property, it is important that they be able to show the investment intent at the time the exchange was conducted. This is an area that Taxpayers should discuss with their own tax advisor.
Related Questions
- What happens if the taxpayer is in escrow to sell the relinquished property and then decides the want to make it part of a tax-deferred Exchange?
- Can the replacement property eventually be converted to the taxpayer’s primary residence or a vacation home?
- Can a Taxpayer exchange relinquished property into a new primary residence?
