Possible 1031 Exchange

[Randy Fountain]

Question for the BP community, A family member of mine recently sold a condo in Florida that they've owned for 2+ yrs and purchased another condo within a 2 week timeframe that was larger in size and more expensive. The condo that was sold produced a nice profit which in turn was used towards purchasing the new place. This new place is basically used as a vacationing home as was the older condo. From what I've read about 1031's, investment properties can be 1031 exchanged for "like" property when not used as a primary residence. Just wondering if this could've been used and if so, why wouldn't the agent/bank lender mention this. Thanks in advance. Randy

[Howard Klahr]

Originally posted by @Randy Fountain:

The other days of the year it is vacant with no rental or tenant use. Does this change anything? or in your opinion, still qualify for an exchange.

In order to utilize a 1031 exchange the relinquished property (the property being sold) as well as the replacement property(ies) must be investment properties or utilized within a trade or business as it relates to real property.  So therefore based on your description, unfortunately no the property would not meet the requirements for a 1031 exchange.

Contact a qualified intermediary and they can explain in great detail what and how to facilitate 1031 exchanges.  There are many rules to be followed and strict timelines associated with this type of transaction, although this deal structure is a very powerful tool.