Fairhaven Realty
Fairhaven Realty, a br of Lakeway Realty, Inc.
Questions & Answers-1031 Exchanges
Posted on December 10, 2009
It’s getting dark, it’s cold, and the clouds are threatening snow this Thursday, December 10, 2009 in Bellingham, WA. You may want to put a log in your fireplace tonight and bask in its warmth!
QUESTIONS AND ANSWERS ON 1031 TAX EXCHANGES (continued from previous blogs)
Can the replacement property eventually be converted to the taxpayer’s primary residence or a vacation home?
Yes, but the holding requirements of Section 1031 must be met prior to changing the primary use of the property. The IRS has no specific regulations on holding periods. However, many experts feel that to be on the safe side, the taxpayer should hold the replacement property for a proper use for a period of at least one year.
If the owner later on wants to take advantage of the home owner’s exemption (up to $250,000 or $500,000 for a couple), there is now a five year holding period requirement.
*Information gathered/quoted from the National Association of REALTORS® online library-1031 Exchange
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