In my last three blogs of this four part series, we went over the Benefits of a 1031 Exchange - Part I, Different Types of 1031 Exchanges - Part II, and The Middleman to Complete a Successful Exchange - Part III

In this last segment, I would like to elaborate on a 1031 Exchange question I’m asked often, “Can I complete a 1031 Exchange with a vacation home or second home?”

And the short answer is yes.

Here’s what you need to know about exchanging mixed-use vacation home.

In 1981, the IRS issued a Private Letter Ruling (PLR) stating that you could 1031 Exchange out of a vacation rental and into another investment property if it was held as an investment as well as personal enjoyment. 

In 1991, the Department of Treasury issued the Deferred Exchange Regulations that went against the IRS's PLR. It stated that an Exchange must be held for investment only and not as a second home or vacation rental with the ability to use it for personal use. 

During this time, it was extremely confusing determining if a vacation rental or second home would qualify for a 1031 Exchange. 

Finally, in 2008, the IRS issued a Revenue Procedure clarifying the guidelines for qualifying a vacation rental or second home for a successful 1031 Exchange.

A Night To Remember with Hapa

Na Hoku Award Winning Group Hapa, performing live at the Crown. A Valentine's Day dinner show and “A Night To Remember“ with Chef Les Tomita of Da Kitchen “presents“ an eight course tapa dinner.

For more information please visit their website, email or call (808) 688-4624.

Friday, February 14, 2014 from 6:00pm - 10:00pm

The Crown Bar and Nightclub
1837 Kapiolani Bvd
Honolulu, HI 96826

Are you already a homeowner but now find yourself desiring more room, more yard, just more space!? Well in this highly competitive and active Hawaii real estate market, being on your "A" game is essential, especially if you need to sell before you purchase.  

Many homeowners find simultaneously selling and buying very frustrating, essentially putting the cart before the horse. This type of process is an "art" and I’ve successfully worked with many clients looking to simultaneously sell their home while at the same time, buy their next home.