1031 exchange rental property for RV.

6 Replies

@Bill Wills , probably not.  The 1031 has to be a sale of investment real estate  followed by a purchase of investment real estate.  An RV is going to be classified as personal property.  There are times when an RV could be treated as real estate when attached to a lot.  But for something you want to travel in you almost certainly get a registration certificate from the DMV and not a tax bill from the county appraiser.  That makes it not real estate so no 1031.

If your tax bill is going to be large then 1031 but into a passive cash flow producing asset.  Purchase an RV and pay for it with the tax deferred cash flow.

Great comprehensive response Dave.  Personal property is no longer an allowable asset to exchange under the IRC §1.1031. Also notable, the relinquished property  must be "held for productive use."  So, a replacement property must be like-kind.  

Thank you for that clarification. I have one more question I hope you can answer.

I repeatedly see and understand the 200% rule in regards to exchanging for multiple properties. But does the rule apply for just one property? 

I would like to sell the rental condo for 130K and would like to buy a rental home which would cost roughly  350K in a more expensive part of the country. Is there any to use a 1031 exchange in this instance?

@Bill Wills ,  I think I got this answered in our PM exchange.  But for the good of the group, The 200% rule is about how you identify potential replacements.  As log as you identify 3 or fewer potential replacements it doesn't matter how much they're worth or how much you buy (although you must purchase at least as much as you sell if you want to defer all tax).

@Bill Wills I'm afraid you may not be able to do a 1031 exchange in this case. The basic requirement of a 1031 exchange is that both relinquished and replacement properties must be like-kind. As the replacement property is a RV in this case, it won't qualify for a 1031 exchange. However, there are other options as well that you may like to explore.