3/5/08
New Rule in 1031 Exchange Now Allows Limited Personal Use
 | By Stacey Macioszek Read more of Stacey's posts |
Revenue Procedure 2008-16, which goes into effect March 10, 2008, officially allows limited personal use of an investment property and will not prevent a dwelling unit from qualifying as property held for trade or business or investment use for purposes of the 1031 tax-free-exchange rules.
Strict personal-use rules of the investment property as a “second home” still apply. The period of the taxpayer’s personal use of the dwelling unit cannot exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at a fair market value. Allowing the owner to utilize the unit for a vacation retreat and still “swap” the equity in the event of a sale and second purchase of like property.
Will this help to stimulate the bleak Villa/Condo market in the Hilton Head Island area? Maybe just a little. But, none the less, this is valuable information for property investors who seek to utilize their investment(s) for limited vacation use.
As always, I would suggest seeking the advice of a trusted tax advisor to answer any questions regarding a 1031 tax-free-exchange.
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[…] New Rule in 1031 Exchange Now Allows Limited Personal Use Jill Denton wrote an interesting post today onHere’s a quick excerptRevenue Procedure 2008-16, which goes into effect March 10, 2008, officially allows limited personal use of an investment property and will not prevent a dwelling unit from qualifying as property held for trade or business or investment … […]