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Yes, you can use the $500,000 Principal Residence exclusion and then defer the rest of the gain using a 1031 exchange. Here it the IRS guidance about that:
https://www.irs.gov/irb/2005-07_IRB/ar10.html#d0e1794
I don't think there is anything definitive about how how it needs to be a rental property before the 1031 exchange, but if it is a rental for more than a year, you are probably okay (if it was two years, you would definitely be safe).
Yes, you can use the $500,000 Principal Residence exclusion and then defer the rest of the gain using a 1031 exchange. Here it the IRS guidance about that:
https://www.irs.gov/irb/2005-07_IRB/ar10.html#d0e1794
I don't think there is anything definitive about how how it needs to be a rental property before the 1031 exchange, but if it is a rental for more than a year, you are probably okay (if it was two years, you would definitely be safe).
We have a similar situation where our primary residence (from Sept 2010 - Oct 2018) was later converted in rental between Oct 2018 - March 2020. We sold the property in June 2020 followed by a 1031 exchange in July 2020. How do we report this sale within Turbotax to make sure that we can get 500K primary home tax exclusion as well as handle 1031 exchange?
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