1031 7 DO NOT DOs

7 "DON'Ts" All 1031 EXCHANGERS Should Know

Over my years as a REALTOR® in the Greater Asheville area,
I have seen strong gains in the real estate market.
During that same time, I also have noticed with interest
the number of clients I meet here in the Asheville area
who are approaching creative-retirement .

I don't know if there is a connection, but interestingly,
just in the past few years, the demand for 1031 Tax Deferred Exchanges
has also "flowered". More and more of my clients
want to know whether they can qualify
their vacation/second homes for an Like-Kind Exchange.

Although I have done many successful 1031 Exchange transactions,
and have taken advanced training in this subject area(see link)
http://www.rliland.com/RliLandUniversityCourseList.html#TaxDeferred1031
I am NOT an expert on the intricacies of the IRS tax code.
I like to refer my clients to those who are experts
for details about the mechanics of the 1031 Exchange,
especially in terms of Vacation Homes.

(In order to conduct a valid 1031 Exchange
it generally is necessary to have such property rented
to unrelated parties for a period of time
both BEFORE and after the exchange, for example.)

In making sure a Property actually qualifies
for the 1031 requirements INTENT is all-important.

In this regard, there are many details that a Qualified Intermediary
http://www.janeanne.com/resources_1031c.asp
explains and handles.

7 DON’Ts I CAN Advise Against:

1) To inadvertently indicate in a Contract that you intend to live in the property,
2) To sign a listing agreement soon after its purchase,
3) To apply for “owner occupied” financing on the property,
4) To move into that property within a specified period of time,
5) To ignore rental history (it must be rented by its tenants for a significant time)
6) To claim the "mortgage interest" deduction for the property on yours tax return,
7) To treat a 1031 investment property
as a "time-share" arrangement.
Section 280A of the Tax Code spells out the Test.
Personal use of the property may not exceed
the greater of: 1. Fourteen (14) days; or2.
Ten percent (10%) of the number of days
that the property is rented at fair market value to others.

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