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by CareyBot

DEAR BOB: In May 2002 we entered into an Internal Revenue Code 1031 tax-deferred exchange for the sale of our Kansas City, Mo., rental condo to a rental house in Sarasota, Fla. It was our understanding it should be rented at least six months and then we had to occupy it as our principal residence for at least two years before selling it. We rented the house for seven months and have occupied the house since January 2003. Now, I read in one of your recent articles that the length of ownership was changed as of Oct. 24, 2004, for such property acquired in an exchange to five years before we qualify for the $500,000 principal residence tax-free exemption. However, when we initiated the tax-deferred exchange, there was no five-year holding period for our situation. Does this new tax law apply ...