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Government and new 1031 decision on vacation

By Georgia Weaver

Real Estate Broker/Owner with Weaver Realtors B55786000

March 10, 2008 08:23 AM

The IRS issued a ruling that will determine how vacation homes can be qualified as investment property in a 1031 exchange.

1031 exchanges are a marvelous tool for real estate investors, check out the link to see how this works with a vacation home. There has always been a problem with the determination of vacation homes as personal or investment property. Now we have very clear rules including ownership for at least 2 years. Also to qualify as investment property, ie be considered in a 1031 exchange the property must be rented at fair market rent for at least 14 days in each 12 month period. There are also strict rules for the owner's use and it goes without saying document everything or don't even try an exchange. To find out more check out the link http://www.realtor.org/RMODaily.nsf/pages/News2008031003?OpenDocument

1031 Exchange is fascinating and seems complicated but there are a professionals who work in this field and make it a lot easier. This is a tool every Realtor should have in their arsenal.

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The Entire Team of Price & Company Professionals

Price & Company Realty - Myrtle Beach, SC

Have you worked with, or do you know of any company that performs REVERSE 1031 exchanges? They are far less common, and more difficult to find a professional that does them.

Mar 10, 2008 08:27 AM

Georgia Weaver

Weaver Realtors - Storm Lake, IA

A Promise Made is a Promise Kept! 712-291-0118

Christopher,

Thanks for the comment, no I have not gone through a reverse (Starker) exchanges but check out Ken Tharp, he is an Active Rain member and he will be up in my area giving a talk to the local Realtors soon. He owns an exchange company and if he doesn't do them I am sure he has a contact with another company that does.

Mar 10, 2008 09:20 AM

Lisa Lambert

The Law Offices of Elisabeth A. Lambert - Fresno, CA

Esq. 1031 Exchange Expert

Georgia:

Nice blog entry. The new Revenue Procedure 2008-16 issued by the IRS regarding vacation homes is very consistent with the recommendation that most conservative CPAs and tax advisors have been giving their clients over the last several years. It models section 280(a) of the tax code, which provides guidelines to taxpayers who want to depreciate their "vacation home" as "investment property."

This Revenue Procedure is a direct result of the Treasury Department's report in September 2007, which highlighted a number of areas under section 1031 where there was insufficient taxpayer guidance. We can expect to see more IRS oversight of 1031 exchanges in the coming years.

Section 1031 is a very useful tax deferral mechanism but it is critical that taxpayers contemplating a 1031 exchange consult with their tax and legal advisors regarding their specific circumstances.

I have a lot more information regarding this subject matter. Thanks for doing your part to get disseminate the this important information.

Mar 11, 2008 01:07 PM

Christopher:

Asset Preservation, Inc. facilitates Reverse 1031 Exchanges. You can find more information about this very leading national company at www.apiexchange.com.

Lisa

Mar 11, 2008 01:09 PM

Ken Tharp

Iowa Equity Exchange - West Des Moines, IA

Section 1031 Exchanges, Iowa/U.S.

Hi Georgia,

I just read your article about vacation home exchanges! Funny, since that came up at the meeting on Monday night. I wrote a blog on that subject, too.

I responded directly to Christopher Price, but for the record, we can accommodate reverse exchanges as well as all other types of exchanges.

Thanks again for inviting me up on Monday - it was great to get to meet you!

Ken Tharp, Iowa Equity Exchange

Apr 16, 2008 09:22 AM

Government and new 1031 decision on vacation

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Georgia Weaver

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