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Gatlinburg Cabin

1031 Exchange Guidelines For Cabins

Are you looking to exchange your investment property for another? The IRS Section 1031 has many rules, but, in general, it is designed to allow the swap of one investment property for another. Although most exchanges are taxable as sales, if the exchange meets the requirements of 1031, you'll either have no tax or limited tax due during the process. Need some help with the ins and outs of the process? Here are some things to know about 1031 exchange investment property rules: 

What is a 1031 Exchange? 

IRS Section 1031 or the 1031 Exchange rule was designed to allow the exchange of one investment property for another. It was permitted to allow owners of investment and trade or business property to defer the gain on the sale of property by acquiring like-kind replacement property. Today, it is utilized for the same purpose. 

Like-Kind Properties

“Like-kind” properties sound like a broad term because of the rules being quite liberal with what it considers to be like-kind. The property types don’t have to be the exact same for the exchange. You don’t have to exchange a cabin for a cabin. You can exchange a condo for a cabin even though these two properties aren’t exactly the same. Here are some examples of properties that follow the 1031 exchange investment property rules: 

Vacant land
Net-lease property
Commercial buildings
Rental properties
Farms or ranches
Resort property
Industrial property
Retail property
Office buildings
Senior-living centers

There are several things to remember.  1) You cannot do a 1031 exchange for your Gatlinburg cabin for a principal residence.   2)  If you use your Smoky 
Mountain Cabin over 14 days a year, the IRS may consider it a residence and not an investment property. 3)    You can probably  trade up and borrow additional funds and not pay capital gains.  4) If you trade down you will probably pay capital gains. 

There are two important things to remember when it comes to timeframe rules. The first thing relates to the designation of the replacement property that you are exchanging with your own property. Once you sell your property, the intermediary will receive cash from the sale. You can’t receive the cash personally or it will no longer be a 1031 exchange. Within 45 days of the sale of your property, you have to choose a replacement property and submit it in writing to the intermediary. 

The next thing to remember is the timing of your new property’s closing. You have to close on the new property within 180 days of the sale of the old property. You can start counting days when the sale of your old property closes. 

There are many questions I defer to an expert in law such as:
1031 Exchange 5 year Rule?
What Are the Rules of 1031 Exchange?
What are 1031 Exchange rules For Real Estate?
Exactly How Does a 1031 Exchange Work
Can I 1031 Exchange  another property for a Gatlinburg cabin?
Can I 1031 Exchange my Gatlinburg cabin for another Gatlinburg cabin?

I am providing two links.   The first is from a 1031 Intermediatory.  The second is IRS Revenue 2008 - 16 which provides guidance on 1031 Exchanges for Vacation Rentals,
in this case  "1031 Exchange of my Gatlinburg cabin" in particular.   These links will answer many of the finer points of 1031 Exchanges of Smoky Mountain cabins.      1031 Exchange Information            IRS Rev Proc 2008 -16

At  Gatlinburg Cabin Finder. I would love to help you with your 1031 Exchange of Your Gatlinburg Cabin.     



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