Getting ready to retire and move to warmer climes? You might not wish to keep managing any investment property you own, long-distance.
By working with an experienced professional, you may be able to enter into a “1031 exchange,” tax-free, for another investment property. As long as you enjoy neither cash from the transaction nor debt reduction, you can exchange properties without owing any tax.
Suppose, for example, you exchange an investment property in Maryland for a Florida home that you rent to tenants. If certain tax-code rules are followed, no tax will be due.
In the future, you can move into the house yourself without triggering any tax. After living in the new house for two years you can sell it and claim the $250,000 capital gains exclusion on sale of a primary residence, or $500,000 if you’re married.
