1031.Exchange INTELLIGENCE NETWORK
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ELIGIBILITY

Personal residence

Also called: primary residence · home

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PLAIN-ENGLISH DEFINITION

A home held primarily for personal use rather than investment or business use.

What it means in practice.

Section 1031 generally does not apply to real property used for personal purposes. A principal residence may instead implicate Section 121 rules, and mixed-use or converted property requires separate analysis.

Why it matters.

Do not conflate the home-sale exclusion with a 1031 exchange.

Additional notes.

Section 1031 generally does not apply to real property used for personal purposes. A principal residence may instead implicate Section 121 rules, and mixed-use or converted property requires separate analysis.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

Related Tax StrategiesSection 121The federal provision that can exclude qualifying gain on the sale of a principal residence, subject to its requirements and limits.EligibilityMixed-use propertyProperty with both qualifying investment/business use and personal or nonqualifying use.EligibilityVacation home safe harborAn IRS safe harbor addressing when certain dwelling units can be treated as held for investment for Section 1031 purposes.
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