riddler[at]medscape.com (mark) posted:

- quote -

In order to do a 1031 (like-kind) exchange for another
rental property, you have to actually establish your old
home as a rental. The way you do that, of course, is to
find a tenant.

When you have a signed lease in hand, and the tenant has
occupied your property (and paid rent and security deposits,
etc.) ... then you will have *established* your old home as
a rental investment property.

Then, you will have to find someone who owns a similar
property in the "different area" which you prefer. They
must agree to trade rental investment properties with you.

I would suggest you seek professional counsel -- with
particular reference to the availability of 1031 exchange
partners in the market where your property resides, as well
as handling the technical aspects of meeting the IRS
standards for such a transaction.

Bill

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mark wrote:

- quote -

That's your bad fact--because it suggests the property was
never a business or investment property, which is the
requirement to be able to qualify for a 1031 exchange.

I presume you would have a significant gain if you sold the
property you purchased back in October. Obviously, if you
didn't have a gain there's no reason to do a 1031 exchange.
Similarly, if you did have a small gain, the change in
employment would likely qualify you for the reduced gain
exclusion under Section 121.

--
Ed Zollars, CPA
Phoenix, Arizona

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riddler[at]medscape.com (mark) writes:

- quote -

Rent it out.

Phil Marti
Topeka, KS

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I've not been able to find any clear guidance on what
qualifies as a conversion of personal property to rental
property.

Here is my situation, I purchased my current home last
October but have decided to take a new job overseas where I
will not be able to own a home. While I could rent out my
current home, I would like to actually purchase a rental
property in a different area. Therefore, prior to moving
overseas I would like to rent out my current home and then
do a 1031 exchange for a different rental property.

With out a doubt I can show my INTENT to purchase a
like-kind property for rental. This issue I have is 'how do
i show conversion of my current primary residence to a
rental'. I would prefer to rent my current home for a
minimal amount of time before selling.

Does anyone have any advice.

Thanks.

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