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My wife and I bought our first house about 8 months ago. It turns out it's not the right fit for us (for many reasons). Because of this, we want to sell it and move to the suburbs on the other side of town and be closer to our families and where we grew up.

Because the market in our city is so incredibly hot right now, we will have gained upwards of $30k from the sale once we do it. After selling expenses, I've figured we would owe around $1500-$2000 in capital gains taxes because we haven't owned our house long enough.

Our realtor mentioned 1031 exchange, a section of the IRS code that would allow us to do a like-for-like swap with deferred tax on assets. Has anyone here tried this? As far as I can tell it's for business and not personal assets. It also just sounds shady as heck.

Thanks!

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    Do not ask a realtor for tax advice any more than you rely on your accountant to do your plumbing work. – littleadv Apr 27 '15 at 1:30
  • I absolutely would not rely on him for tax advice. I have an accounting degree myself but am nowhere near being a CPA. However, I wanted to get an idea of how feasible this is or if I shouldn't waste my time talking to a CPA about it, since it's kind of expensive to talk to one. – the-nick-wilson Apr 27 '15 at 1:34
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Yes, your realtor is a moron. (I am a realtor, and sorry you have such a bad one) Every industry has its good and bad. You really should find a new realtor, a good one.

You know the 1031 exchange is for rental property only. And that saving $2000 isn't worth staying in the house to complete the two years required occupancy.

  • Interesting. See and he's an investor himself with a lot of properties (rentals and flips) so it probably easily applies to him, but maybe he doesn't understand it wouldn't apply in our case. – the-nick-wilson Apr 27 '15 at 0:15
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    You're very forgiving. If he's a realtor advising others, he should know what he's talking about. Giving out bad information can cost a client a lot of money. – JoeTaxpayer Apr 27 '15 at 0:18
  • That's a good point. And he's not officially our realtor yet, so we aren't stuck with him. Thanks for the feedback, Joe. – the-nick-wilson Apr 27 '15 at 0:35

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