Thursday, November 16, 2006 at 09:16AM | Staff 1031 Exchanging Vacation Properties and Second Homes
The issue of selling a vacation property, or even a second home for that matter, and 1031 exchanging it for other rental (investment) property is one that generates many questions.
The fundamental issue is whether the real property is truly held as rental (investment) property or whether it is just a vacation property or second home and used for personal use. It is not an easy question to answer because in most cases the answer is a blend of the two scenarios; it's part vacation property and part "investment property."
You need to gather all of the facts involved in your specific situation and sit down with a 1031 tax deferred exchange expert to determine whether your fact pattern may qualify for 1031 tax deferred exchange treatment.
You can learn more about this subject at http://www.exeter1031.com/article_vacation_property.aspx which discusses the technical issues in much greater detail and has been updated for rulings provided by the Internal Revenue Service.
