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horst99: "rather than move back into the house for two years, why not do a tax-free exchange into a house you would "like to live in someday" and then rent it out for a while (18 months or so) before moving into this house.

That way you get rid of the house (which is what you want to do) AND DON'T HAVE TO MOVE BACK IN (WHICH IS PROBABLY WHAT YOU DON'T WANT TO DO).

Do a tax-free exchange into bare land (investment) if you don't want to do the rental property scene anymore.

all taxes are deferred into the rental property."

Are you sure of your proposed exchanges? I thought that they had to be "like-kind." Swapping a rental property to raw land does not seem like-kind to me.

Also, you seem to suggest that this simply defers the issue for a later date and does not eliminate the problem. I am no expert, but I believe that the depreciation will need to be recaptured one day; maybe it eludes the taxman upon death of the owner, DWDIK?

Just my $0.02. Regards, JAFO
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