1031 exchange
If you already own an investment property, you may benefit from purchasing your next dream vacation home with a 1031 Exchange.
We have partnered with SellTaxFree.com to assist our clients with buying and selling vacation homes in a 1031 exchange. If you are planning to purchase a vacation rental through a 1031 Exchange, we can help you understand market opportunities and select the right vacation home. But we don’t stop there. We conduct a detailed analysis of each home to identify the best investment properties, help with financing and insurance, and connect our clients with vacation rental managers. At Revedy, we believe vacation rentals are the best investment option for a 1031 Exchange.
1031 Exchange 101
Unique Tax Benefits
When it comes to vacation homes, a 1031 exchange involves selling one income producing property and using the proceeds to purchase another income property. This exchange or swap allows you to defer paying taxes on the sale. Many real estate investors are using 1031 exchanges to sell an existing investment property in order to strategically purchase a vacation rental.
Rental Requirements
To meet the requirements of a 1031 exchange, a vacation rental must be rented for at least 14 days each year at fair market value. The property may also not be used for more than 14 days of personal use each year or 10% of the nights rented, whichever is greater. These same rental requirements apply to a seller’s current investment property that they intend to sell in a 1031 exchange.
RETURN ON INVESTMENT
Depending on the location and amenities, a vacation rental can generate considerably more net revenue (take home cash) than most long term rentals. Strong cap rates and revenue potential are key reasons why we recommend to our clients that they consider investing in a vacation home through a 1031 exchange. Contact us today to find out if a 1031 exchange is right for you.