While most tax deferred exchanges of real property under §1031 of the Internal Revenue Code of 1986, as amended, involve only business or investment property, there is a significant number of transactions that involve properties that have been converted into primary residences. The recently released Revenue Procedure 2007-12 (Jan. 22, 2007) continues the Internal Revenue Service's nearly annual trend, started in 2004, of taking a closer look at these types of exchanges.