I want to sell a vacation property. I am going to purchase another property to use as vacation and short-term rental. Will this property qualify as a like kind?

[forestdan]

The first property was never rented.

[Critter-3]

Does vacation home qualify for 1031?

It has been established that vacation or second homes held by the Exchanger primarily for personal use only do not qualify for tax deferred exchange treatment under IRC §1031.

You can sell your vacation home through a 1031 exchange as long as you rented it for more than 14 days per year and your personal use was no more than 14 days per year (and less than 10% of the total nights rented) over the two years leading up to the sale.    

https://www.vacasa.com/buy-vacation-home/1031-exchange#:~:text=You%20can%20sell%20your%20vacation,le....

[tagteam]

In order to qualify for a like-kind exchange, both the relinquished and replacement properties need to be held for productive use in a trade or business or for investment.

See https://www.law.cornell.edu/uscode/text/26/1031

If you are interested in doing a Section 1031 exchange in the future, you should do a search for a "Qualified Intermediary" in your area.

[Carl]

The first property was never rented.

Short answer is no. Several things to make you aware of in as much simplicity as I can.

- What you're asking about is referred to as a "1031 exchange".  This type of transaction does not negate any tax liability. It only delays it.  See https://www.irs.gov/pub/irs-news/fs-08-18.pdf for more information.

- Can only be used for investment/income producing property. Your current property is not used to produce income.

- A 1031 exchange must be handled by a 3rd party intermediary in order to qualify as such under the IRS rules.

- There are time constraints on when the transaction must be completed. Additionally, in some states the state laws on this are "in addition" to federal laws, and can make the process more complex. So the use of an intermediary is a must.

[tagteam]

Actually, the "short answer" would be "not yet". 

As @Critter-3 stated, there are parameters for rental periods of vacation homes which, if met, would potentially meet the requirements for a 1031 exchange. Since @forestdan has not yet sold the property, it is not too late to comply with the requirements prior to a transfer pursuant to Section 1031.

Rev. Proc. 2008-16 provides a safe harbor for this purpose.

See https://www.irs.gov/pub/irs-drop/rp-08-16.pdf