Comments on: Court rules against 1031 exchanges for vacation homes http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/ We love mountain living... Wed, 20 Aug 2008 11:10:37 +0000 http://wordpress.org/?v=2.1 By: Ronnie Roach http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-38 Ronnie Roach Tue, 05 Jun 2007 14:07:38 +0000 http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-38 Joanne, This is an important issue for all of us that work in the vacation market. I spoke with a client last night and they were concerned about their exchange because they had not rented their home for some time. One of the articles suggested that the consumer not use the property for some time but I would like to see some clarifications on that. Our market like yours is very seasonal and many owners use their property in the shoulder season. Consumers must consult professionals or pay the price of cutting corners. Joanne,

This is an important issue for all of us that work in the vacation market. I spoke with a client last night and they were concerned about their exchange because they had not rented their home for some time. One of the articles suggested that the consumer not use the property for some time but I would like to see some clarifications on that. Our market like yours is very seasonal and many owners use their property in the shoulder season. Consumers must consult professionals or pay the price of cutting corners.

]]> By: Joanne Hanson http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-39 Joanne Hanson Tue, 05 Jun 2007 14:13:56 +0000 http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-39 <code>I think it is more a matter of deriving investment income from it than not using it. Rental income and the treatment on your income tax return (depreciation as an investment property) will assume more importance. Thanks for your input Ronnie! <img src="http://signatures.mylivesignature.com/54485/206/76E5905C5FAAE2D271C0D5E1181BDF94.png" style="border: none; background: transparent;"/></code> I think it is more a matter of deriving investment income from it than not using it. Rental income and the treatment on your income tax return (depreciation as an investment property) will assume more importance. Thanks for your input Ronnie!

]]> By: Jeff Johnston http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-43 Jeff Johnston Fri, 08 Jun 2007 18:18:00 +0000 http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-43 This is a very important case as this issue has needed some clarification. There is a tax law unrelated to 1031 that says a property used for personal reasons for 14 days or less a year or 10% of the number of days the property is rented (whichever is greater), can be considered an investment property. Although not specifically related to 1031 law, many professionals use it for a guideline. A couple important things about this case can shed some lite. The court found that the PRIMARY reason they bought the property was vacation, second to that was investment intent for appreciation. I mean, they bought a boat to cruise around in, not good support. In another similar case awhile back a court approved the investment intention of a vacation home used in a 1031 with apprciation being the number one intention. The taxpayers there did not rent it out, but they also did not use it personally very often. So, as always counsult a tax advisor to look at the specifics, the devil is in the details. This is a very important case as this issue has needed some clarification. There is a tax law unrelated to 1031 that says a property used for personal reasons for 14 days or less a year or 10% of the number of days the property is rented (whichever is greater), can be considered an investment property. Although not specifically related to 1031 law, many professionals use it for a guideline.
A couple important things about this case can shed some lite. The court found that the PRIMARY reason they bought the property was vacation, second to that was investment intent for appreciation. I mean, they bought a boat to cruise around in, not good support. In another similar case awhile back a court approved the investment intention of a vacation home used in a 1031 with apprciation being the number one intention. The taxpayers there did not rent it out, but they also did not use it personally very often. So, as always counsult a tax advisor to look at the specifics, the devil is in the details.

]]> By: Joanne Hanson http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-44 Joanne Hanson Fri, 08 Jun 2007 18:43:26 +0000 http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-44 <code>Thanks for your insight Jeff! It has been a grey area for a long time and don't even try to tell people if I think they can do a 1031 or not. It is not my area of expertise, and I refer them to people whose job it is to know. <img src="http://signatures.mylivesignature.com/54485/206/76E5905C5FAAE2D271C0D5E1181BDF94.png" style="border: none; background: transparent;"/></code> Thanks for your insight Jeff! It has been a grey area for a long time and don't even try to tell people if I think they can do a 1031 or not. It is not my area of expertise, and I refer them to people whose job it is to know.

]]> By: carmen rivero http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-215 carmen rivero Wed, 26 Sep 2007 15:28:29 +0000 http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-215 Joanne, this is a very delicate issue that must be handle by proffesionals. There are many gray areas, like you say, but still a great deal for sellers. I would encourage my clients to do a 1031 exchange if their property qualifies for it. Joanne, this is a very delicate issue that must be handle by proffesionals. There are many gray areas, like you say, but still a great deal for sellers. I would encourage my clients to do a 1031 exchange if their property qualifies for it.

]]> By: Vacation homes in Colorado and elsewhere will be affected by IRS ruling | Summit County Colorado Real Estate - Breckenridge, Frisco, Copper Mountain Realtor - The Best of Mountain Living http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-470 Vacation homes in Colorado and elsewhere will be affected by IRS ruling | Summit County Colorado Real Estate - Breckenridge, Frisco, Copper Mountain Realtor - The Best of Mountain Living Sat, 23 Feb 2008 00:27:28 +0000 http://www.mountain-living.com/blog/2007/06/01/court-rules-against-1031-exchanges-for-vacation-homes/#comment-470 [...] even though they don’t rent their properties, consider them investments.    Last spring, a second home owner in Georgia lost a court case where they claimed just that, and now the IRS has become more specific.  Here is some of what [...] […] even though they don’t rent their properties, consider them investments.    Last spring, a second home owner in Georgia lost a court case where they claimed just that, and now the IRS has become more specific.  Here is some of what […]

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