Form 4797 Exchanged 2022-2023

Instructions and Help about Form 4797 Exchanged

Welcome to 10:31 University I'm Paul Holloway today's topic is is it possible to do a 1031 exchange on a second home or vacation home most 1031 exchanges are done on pure investment properties that being a rental role and held for long term speculative reasons or a commercial building that you're running your business out of but what about a vacation home or a second home that you might have in a resort type area is it possible to make that work under 1031 and at the same time is it possible to actually use that property for personal enjoyment for a certain amount of time well the answer is yes as long as you follow this revenue procedure revenue procedure 2023 - 16 this procedure came out to give you guidance that if you follow these steps you will have what is referred to as a safe harbor exchange and you are not swimming in shark-infested waters it's a three-fold test of what you need to do to make a so-called second home or vacation home work under 1031 of the code the first test is the holding period test and what the IRS wants you to do is to actually own the property that you are either selling or the replacement second vacation home that you're going to buy on the back end they want you to own it for two full years minimum so you have to actually own the property for minimum of two years next is the rental test and what the IRS wants you to do in each of those two years of ownership for the two-year rule is that they want you to have at least a 14-day rental history in each of the two years of ownership so 14 or more...