How to do 1031 exchange?

We have a house that has increased in value, and plan on selling it soon. I want to do a 1031 exchange so as to avoid paying taxes, but I don't know how to go about it.

Can someone explain it to me? Do you go through a lawyer or an accountant? Do you wait until you buy another house, or do you have to do it before?

TIA

Is this your personal residence or an investment house? Have you ever lived in this house and when was the last time you lived in it? How long have you lived in this house? How long have you lived in your current house? 1031 exchanges only can be done on investment properties and you need a 3rd party to handle the money and transaction. You need to identify the property prior to the sale but you don't need to exchange it until after the sale. Let me have more info and I'll give you the number of days only if a 1031 is applicable. You need an attorney, not an accountant. Accountant is actually out of the whole thing. The property you buy can be for any amount and you can actually buy multiple properties. If the amount buying is less, you'll have taxes to pay and that's when you need an accountant because you would have depreciated the properties and need to know what your basis is.

It was purchased for investment purposes, but I am living here. I've been here for 1 year, 3 months.

Thanks for your help.

If you stay there for 2 years, you pay no tax up to $150,000 single, $500,000 married, of PROFIT! Profit is sales price minus purchase price plus capital improvements. Since you used it for investment, I believe, you may have to recapture your depreciation. That's an accountants job.

It's $250,000 for the homeowner exemption as a single person, BTW.

What if it had been purchased as a residence? Would it be subject to capital gains?

Iceberg Slim corrected me, it was a slip of the finger on the computer, it's tax free profit after sales price plus improvements (not maintenance) $250,000 for a single person or $500,000 for a married couple.

It doesn't matter if it's bought as a residence, matter of fact it's easier. The requirement is you must live there for 2 of the past 5 years unless you were moved by your employer and then it's prorated. There may be some other similar exemptions.

It's even better if you inherit the house, you get a step up in basis which means whatever the house is valued at when you die, that's your sales price and then its the 250k/500k on top of that price.