I just had a client come in to see me that owned a commercial rental property that he no longer wanted. Researching his tax basis we determined that he will have a $150,000 capital gain on sale. Instead of selling the property his realtor has suggested that he do a 1031 like-kind exchange for a residential rental property to defer the gain. The realtor further suggests that he should only rent it out for a year or so, then move in and treat it as a personal residence. By doing this the realtor insists that the deferred gain of $150,000 on the 1031 like-kind exchange would be excluded under Code Section 121 (non taxable gain on personal residence) as long as the client lives in the residence for two years.