I am thinking of purchasing a duplex as a vacation home in another state. First, can I do this? Second, can I rent out one half full time and Air BnB the other half when I'm not using it? Also, is this type f property subject to the same 2 year owner occupied restrictions when selling the property to avoid capital gains? In other words could I sell this property after 2 years and avoid cap gains tax without doing a 1031 exchange?
I would suggest a totally different plan.
Buy a duplex because it makes a great business sense and use the profits to pay for your vacations. This way you can afford to stay in the nicest hotels and eat at great restaurants. It is better than hunkering down in a rental duplex and dealing with tenant issues while you are on vacation. You can also buy a duplex in a place you want to visit so airfare and hotel can be tax deductible against your profits.
To answer your question, the IRS deduction on capital gains is only valid for your primary residence not a vacation home.
Using half a duplex as a vacation home is not profit optimizing, is not tax-efficient, and gives you less flexibility for your vacation plans.
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