In a previous blog you read that a 1031 Exchange is designed for investment or business properties that are held for income-producing purposes, such as rental homes, commercial buildings, or vacant land held as an investment.
If the property you are lookig to sell is your home, that has been your primary residence, it does not qualify for a "1031 Exchange" under current IRS rules; however, there is
Good News
Homeowners who have lived in their home as their primary residence may qualify for one of the more valuable tax benefits available—the "Section 121 Home Sale Exclusion", and
You will be able to exclude:
- Up to $250,000 of capital gain if you are single.
- Up to $500,000 of capital gain if you are married and file a joint tax return.
Unlike a 1031 Exchange, with a Section 121 Exclusion you are not required to purchase another home in order to receive this benefit. Once your home is sold, you are generally free to use the proceeds however you choose—whether that's purchasing another home, downsizing, investing, or simply keeping the funds.
1031 EXCHANGES IN TEXAS
