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Can I move into a 1031 exchanged property that was never rented?

May 14, 2004


Subject:  1031 Exchange
From:  Ina
Date:  Thu, 15 Apr 2004

We made a 1031 exchange about 6 months ago. The property that we received was a more expensive one, because we believed it would be easier to rent. After six months, we still havenít been able to rent it. We discovered the house is located in a depressed area.

Our tax accountant says we could move into the rental property since we purchased it with the intention of renting it.

Could we move into the rental without having tax consequences?

Answer

Date:  Fri, 30 Apr 2004

Hello Ina,

I think you have a legal basis for doing so. This situation is one that is likely to get IRS attention. Do you want to live in "a depressed area"? Can you exchange from this property to another one? Maybe you should sell the property on an installment sale basis?

Good luck!
Mike Gray

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Can I move into a 1031 exchanged property that was never rented?

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