@Stasy wrote:
Thank you so much for your answer!
Do I understand correctly that I cannot also defer paying the taxes through a 1031 exchange because the property is not rental?
That is also correct.
Normally, property is sold for the full price, and the contents are transferred for a nominal consideration like $1. I have never encountered a case where the seller wants to sell the contents for such a large percentage of the total. I suspect they are trying to cheat on their own taxes.
You need an attorney to review this deal. It may be that if the seller is doing one shady thing, they may be doing other shady things and you may be better off avoiding this seller rather than taking unknown risks. It may also be that under state or federal law, the entire price will be considered the cost basis of the apartment when you eventually sell, in spite of the seller's games. That is something you could review with a professional tax advisor.
However, any capital gains you have from selling the first home (or half the first home) are taxable to you and can't be deferred or rolled into the new home. But you can use the personal exclusion of $250,000 if you lived in the home as your main home for at least 2 of the past 5 years and owned the home at least 2 years. The first $250,000 of your gain (specifically, your half of the gain) is excluded from your income and you pay capital gains tax on the rest. If your gain is less than $250,000, it is not taxable.
See here for more.
https://www.irs.gov/forms-pubs/about-publication-523
