Vacation Home Status Clarified by IRS
· Comments
I know several agents who live in resort areas where a large part of their practice focuses on the buying and selling of vacation homes.
In case you haven’t seen the recent ruling by the IRS, you’ll be glad to know that vacation homes can be used in 1031 exchanges, assuming that the applicable restrictions are adhered to.
There’s an article at Realty Times that will explain the ruling in more detail. But, it is good to know that with some restrictions on the length of time the property is held and how it is rented out, for example, vacation homes can be considered investments!
11 Comments
March 18th, 2008 at 7:45 am
I think a large portion of these forclosed homes will become vacation rentals. Many houses up for foreclosure are located near beaches, historic area and places where people like to vacation. I think this business will grow. The 1031 just the icing on the cake. Choose wisely this will be your vacation destination also.
March 18th, 2008 at 9:53 am
I read in an article that less people are doing 1031 exchanges because they are concerned that Democrats might roll back the capital gains tax to the older, higher limit after the next election. So the investors rather pay less capital gains now then in the future when they would eventually sell.
Unfortunately, I can’t find the article. I think it was in the Wall Street Journal.
March 19th, 2008 at 8:10 am
Interesting comment on raising the capital gains tax after next election. Time will tell! I think many are buying vacation homes for themselves and second homes.
March 20th, 2008 at 8:27 am
Another great reason to invest in a vacation rental house or condo. Tax breaks are a welcome addition to low interest rates and discounted property.
March 20th, 2008 at 3:53 pm
Great article, I love tax breaks and that would be a great incentive to sell with.
Jaxson Smith – To learn more about Vernal Real Estate opportunities.
March 20th, 2008 at 5:54 pm
Hello Jaxson,
I agree – knowing how to justify a 2nd home as an investment would be a great skill to have. A simple way to illustrate that might even be a good “irrestible offer”, too!
Kathleen
March 21st, 2008 at 8:57 am
Many may be having trouble getting an investment loan and not liking the interest rates and may just choose to buy a vacation home for themselves and not rent it out.
March 21st, 2008 at 4:19 pm
I wish I had the problem of making that decision!
March 22nd, 2008 at 9:38 am
You be surprised how much it takes to invest. I read a blog one day on investing and stated there are 160 ways to invest and only 3 are using cash. Gives you something to ponder when we all see great deals out there and wonder if this might be out way to make a little investment for our future benefit.
March 22nd, 2008 at 5:03 pm
That sounds interesting. If you find that blog again, please post the link here!
March 23rd, 2008 at 8:59 am
I think many of these foreclosures in resort areas will become vacation homes and I think may choose to be vacation rentals and use the 1031 option on taxes. But I think most will just become second homes.