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Hello and thank you for using Just Answer,If we convert it back into a primary residence, do we then lose the passive activity loss or does it just continue carrying forward?No, the loss can be used when soldIf we sell it and use the revenue to significantly pay down a mortgage on another property we already own, is that considered a like-kind exchange?No, a like kind exchange would not be satisfied under this type of arrangement. Both the relinquished property and replacement property must be held for productive use in a trade or business or for investment. Property acquired for immediate resale will not qualify. The taxpayer's personal residence will not qualify. The relinquished property must be exchanged for other property, rather than sold for cash and using the proceeds to buy the replacement property. Most deferred exchanges are facilitated by Qualified Intermediaries, who assist the taxpayer in meeting the requirements of Section 1031. The replacement property may not already be held by the taxpayer.