Condo and Home 1031 Exchange

Yes, if it is an investment property. We have handled exchanges involving condos and homes, including rental houses, townhomes, and condominiums. A property you hold to rent out to tenants can be exchanged for another investment property, and it does not have to be the same kind. A rental house can become a shopping center, and a condo can become farmland.

Your primary residence does not qualify for a 1031 exchange. Vacation or second homes may qualify if they meet the IRS safe harbor in Revenue Procedure 2008-16, which requires holding and renting the property for investment, with limited personal use. We have a blog post on this if you want the details.

Properties bought to fix and resell quickly are generally treated as inventory, not investments, so they usually cannot be exchanged. Condos also come with association documents, approvals, and fees that can add time to a closing, which is worth keeping in mind when your 45 day clock is running.

If you own several rental properties, you can sell one or more of them and buy one larger replacement, or the other way around. As always, consult with a CPA or tax attorney to confirm the rules for your situation.