Steamboat Springs 1031 Exchanges

Using a 1031 exchange when selling your vacation home involves a little more preparation. 1031 exchanges are designed to help you with investment property and depending on how your house has been used, it can create some confusion.

A property considered for personal use if the owner uses it for more than 14 days during the year. It can also be considered personal property if the property was used more than 10% of the days it was rented during the year at a reasonable market value.

Recently the IRS established a more decisive position on what constitutes a 1031 Exchange involving vacation homes. One of the most important factors for this type of exchange is that the home must be intended to be used as an investment. To use your vacation home in a 1031 exchange it is recommended that you begin with a 24 month holding period. During each of the 12 month periods you must rent the property for at least 14 days at fair market value.

However, you are allowed to continue using the property, during each 12 month block, the owner is only allowed to use the property for the greater of 14 days or 10% of the days rented. This means that if you rented the property for 30 days that year, you could still use it for 14 days, but if you rented it for 300 you could use it for 30.

We are here to help you with selecting the right property for you to complete your 1031 exchanges, but we rely on the proper tax and Qualified Intermediary experts to help make sure this is a smooth and painless process. While contemplating benefits of 1031 exchanges we strongly encourage you to consult a tax official to discuss any unanswered questions or special circumstances, which may apply to your situation.

Jon Wade  – Broker Owner  Colorado Group Realty, LLC
970-819-6930 or jon@mybrokers.com
509 Lincoln Ave Steamboat Springs, CO 80477