IRS Issues Guidance on 1031 Exchanges and Vacation Property and Second Homes

The Internal Revenue Service has finally issued guidance to help taxpayers understand when a vacation home or a second home may qualify for 1031 exchange treatment.

Revenue Procedure 2008-16

The IRS issued Revenue Procedure 2008-16 to help define when vacation property or second homes might be qualified use property and therefore qualify for tax-deferred exchange treatment under Section 1031 of the Internal Revenue Code.

Treasury Inspector General's Report

This long awaited guidance regarding the 1031 exchange of vacation property and second homes was a direct result of the Inspector General's Report issued on Like Kind Exchanges last September.

1031 Exchanges of Vacation Property

I've tried to pull all of the information together and write a comprehensive article on the requirements to 1031 exchange vacation homes or second homes. You can read the article here.

Treasury Inspector General Issues Audit Report on 1031 Exchanges

The Treasury Inspector General has completed an internal audit at the IRS over 1031 Exchange administration. The Treasury Inspector General has issued his report and has recommended that the IRS significantly increase its supervision and review of 1031 exchange transactions, do a better job of defining vacation property and second homes and their qualifications under the 1031 exchange, and revamp and clarify its Form 8824 for use in reporting 1031 exchanges. You can download a copy of the report at: http://www.exeter1031.com/irs_code_regulations_rulings.aspx.