I got an email from Cindy Nosan from Orexco, “The 1031 Exchange Experts” today, regarding the tax deferral treatment of VACATION HOMES.  The email started like this:

Finally-IRS Guidance on Exchanging Vacation Homes Revenue Procedure 2008-16 Provides Safe Harbor

Until now, the issue of whether a vacation home qualifies for tax deferral treatment under IRC 1031 was the subject of much scrutiny and uncertainty.  To the delight of many tax practitioners, on February 15, 2007, the IRS eliminated that uncertainty by issuing Revenue Procedure (“Rev. Proc.”) 2008-16, effective March 10, 2008, which provides a safe harbor for exchanges of vacation homes (defined as “dwelling unit” in the “Rev. Proc.).  Now taxpayers can have a clear understanding of the circumstances under which the IRS will not challenge whether a vacation home will qualify as property “held for investment” under IRC 1031.

The email goes into length about the criteria, either email Cindy at cnosan@orexco1031.com  for more details, or myself and I will send you the remainder of her email.

This will help people better understand the rules for exchanging vacation homes.  Thanks Cindy.