1031 Exchange Clarification
We are getting ready to close on a 3 family that is zoned commercial/residential.
We also thought that we would "exchange" that for a
second home in FL.
Is this a no can do?
Does the exchange have to be another multi-family
You can exchange ANY kind of real estate for ANY kind of real estate, as long as the properties are either held as rental/investment or business use properties. Multi-family for SFR is perfectly O.K. If the property is being held/used personally as a second home then it would not qualify for 1031 exchange treatment.
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supposed we were to just use it 1- 2 weeks a year and just not rent it?
Is there a way to do that?
So, yes, it is an investment purchase, however, we would use maybe once or twice a year.
And keep vacant the rest of the time.
Can we do that?
Personal use for one or two weeks does not by itself disqualify the property from 1031 exchange treatment. However, you would be required to demonstrate or prove that you had the INTENT to HOLD for rental or investment purposes and holding this type of property can be difficult to prove that you intended to hold it as investment property.
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Refer to this article entitled "Holding Requirements for ...." posted on this web site: http://www.thecreativeinvestor.com/commercial/modules.php?name=Articles&file=article&articleid=572
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