Exchange a Second Home?

As far as a second or vacation home being considered 'like-kind' in a 1981 Private Letter Ruling**, the IRS allowed Section 1031 treatment of a vacation home where the taxpayer intended to acquire property for personal enjoyment and as an investment. The IRS stated, 'The house and lot you acquire in this trade will be held for the same purposes as the properties exchanged therefore: to provide for personal enjoyment of the community and to make a sound real estate investment.' This Private Letter Ruling would seem to support the argument that 'personal enjoyment' of a property does not prevent it from qualifying for a 1031 exchange.

*IRS Reg. 1.1031(a)1(b) **Private Letter Ruling 8103117

National Association of Realtors statistics show the second home market to be very robust and should continue as the 'baby boomer' generation continues to retire early and often.  A boomer retires every few seconds in this country, so this is a market that shouldn't be ignored.  Golf course, lake, beach, mountain and ski homes are just a few possibilites.  There is even a way to buy a second home, and by following some guidlines, convert it into your primary residence and make the capital gains go away completely.  Call for more information today at 573-480-6420.