|
|
|
New 1031 Exchange Rules Help Property Owners with 2nd Homes!New Limited Personal Use Verbiage now Allows Homes to Qualify 1031 Exchange
To be more specific, the personal use of either a second home or investment property cannot exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at a fair market value. Note, the IRS is clear that the property has to qualify as an investment propertyto be a candidate for a tax-free exchange. This really helps my buddy Joe who has 2 second-homes he uses about 2 weeks year each. Joe rents them out for most of the year (or when he can). But as Joe is getting close to retirement, he is looking at exchanging his property to maximizing his investment potential. With this change, Joe can now do a 1031 exchange and not have a huge tax obligation. Now I have to add my disclaimer. Please review your situations with a real estate lawyer before you exchange your 2nd home.
|
Author
Alan 'AJ' Nisen California Contra Costa Mortgage Officer A Large Bank in America Lafayette, CA Office Phone: (925) 688-3820 Cell Phone: (925) 963-5836 More information... Contact Alan 'AJ' Nisen California Contra Costa Mortgage Officer |
This Internal Revenue Service (IRS) has announce a change in their enforcement of the Section 1031 tax-free exchange rules that now allows investors and second-home owners the ability to swap the property for new investment property a even though they have enjoyed personal use of said property. Revenue Procedure 2008-16, will go into effect March 10, 2008 to allow limited personal use of an investment property by owners but still allow them to qualifying as "property held for trade or business or investment use for purposes of the tax-free-exchange rules." 