Of course you can, but - Posted by Dave T
Posted by Dave T on June 16, 2001 at 21:03:34:
You have to structure the deal as a sale and a purchase. Your buyer gives you his property as consideration for your house, and, you give your property as consideration for his duplex.
Two purchase and sale agreements, and a simultaneous closing.
Now for the financing. Is there a mortgage on either or both properties that need to be taken care of? Just buy each other’s property “subject to” the existing mortgages (deed each property to a separate land trust, and assign beneficial interest to the other party). Since neither sale qualifies for 1031 like-kind exchange tax treatment, both ends of the transaction will be treated as a sale for tax purposes.
Yours will qualify for the capital gains exclusion if you meet the two year ownership and occupancy tests. The portion of the sale of the duplex attributable to your buyer’s primary residence will also qualify for the capital gains exclusion if he also meets the two year tests.