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Can you provide more detail as to the ineligibility versus eligibility of a 1031 exchange deriving...


Can you provide more detail as to the ineligibility versus eligibility of a 1031 exchange deriving from the use of a second home?

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Answer #1

According to Section 1031 exchange, both the properties which are to be exchanged must be held for use in a trade or business or for investment purposes.

Ineligibility

Property that is personally used such as primary residence, second home or vacation home does not qualify for like -kind exchange treatment. A second home or a vacation home held strictly for personal use with no rental activity at all is all considered a second home and doesnot qualify for exchange.

Eligibility

Both the properties must be similar in nature to qualify for like -kind exchange. That portion of the primary residence that is used for business or trade or investment qualify for 1031 like-kind exchange.

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