Like-Kind Exchanges of Personal-Use Residences

Abstract:     
The law governing section 1031 exchanges of personal-use residences ranges from very explicit, in the case of principal residences, to very vague, in the case of mixed-use second homes. The law excludes from section 1031 nonrecognition exchanges of property used solely for personal use. The IRS has provided guidance regarding exchanges of mixed-use principal residences and has provided an all-or-nothing safe harbor with limited applicability for exchanges of mixed-use second homes. To complete the body of law governing exchanges of personal-use residences, this article suggests that the IRS should provide broader guidance for exchanges of mixed-use second homes.

Number of Pages in PDF File: 12

Keywords: section 1031, vacation homes, second homes, principal residence, like-kind exchange, tax-free exchange

JEL Classification: A00, E62, H25, H26, H24

Accepted Paper Series