Has anyone here recently done a 1031 exchange? How difficult was it to complete? Any tips?
My tenants are buying a house and planning to move out this winter, so I am considering finally selling this rental house in the spring. I no longer live in the same city as the rental, and it was never a great financial decision to hold on to it anyway - I thought I would one day move back in, but now I have no desire to live in that city again.
I would love to be able to 1031 exchange into a property closer to where I currently live, and hopefully find one that I might want to someday move into as my permanent residence (like in 5 years).
My rental property should sell for ~$1.2M+.
If I just pay the capital gains tax, I would clear ~ $530k after taxes and fees (assuming tax rates don't rise; my CPA figured this out for me so it should be fairly accurate).
If I do a 1031 exchange, I should have about $715k to roll into a new property, but I'd have to get financing of ~$500k.
1031 exchanges seem difficult and stressful, especially the part of about identifying 3 properties within 45 days of a sale - my new city just doesn't have much coming onto the market in the price range that I'd have to buy in (~$1.3M) so that part is going to be tough. Plus, I need to stay employed at my contract job in order to get financing for the new house, and I'm kind of over that too.
But it also seems silly to leave over $200k on the table just because 1031 exchanges seem hard. Although on the other hand, if I invest this money and got 7% growth I could get that $200k back in about 4 years (if I used the compounding interest calculator correctly). Then again, if I find my dream home, it may be a good opportunity to get it before prices go up even more as I don't think my area is going to cool down much in the coming years.
Any thoughts on any of this or maybe something I'm not thinking through?