What Qualifies as a 1031 exchange?

To qualify for a 1031 exchange, a property must meet four basic rules:

1. Be held for an investment or used for productive purposes in a business.
2. Be exchanged with a like-kind property (any other type of real estate).
3. Investor must identify replacement properties for the one being exchanged within 45 days.
4. Exchange transaction must be completed within 180 days.

While it’s not possible to exchange a principal residence, a recent court ruling has clarified rules that make it possible to exchange a second home or a vacation home, Brown said.

The property must meet these requirements: The owner has held the property for at least two years; rented the property for at least 14 days per year at fair market value; and used the property personally for no more than 14 days of each year.

Posted by: kathy@parcbay.com
Source: Realtor.org