topic 1031 Exchange Personal Days in Investors & landlords

1031 Exchange Personal Days

Panthers71 — Mon, 19 Oct 2020 01:12:36 GMT

I may have screwed up. We have a vacation home that is rented May through October. We block it off the rest of the year so that we can both use once in a while and also mostly spend fixing and painting stuff. Last year I put all the days that we were at the property on the tax return. As I’m considering selling and using 1031 exchange I learn now that my actual personal use days are limited to 14 for the past two years to qualify for the 1031. Personal no work around house was under 14 days. To use a 1031 should I amend my 2019 return to less than 14 days used and keep my 2020 personal days at 14 days to cover the two previous years to qualify for a end of 2020 sale OR file 2020 and 2021 correctly and wait a year and sale at end of 2019/2020. Would an amended 2019 return to correct personal days create a IRS flag if a 1031 sale followed at end of 2020 ? Appreciate any replies.

Re: 1031 Exchange Personal Days

M-MTax — Mon, 19 Oct 2020 02:06:32 GMT

Think you need a tax pro but remember that you need to hold the replacement property for 2 years also with little personal use. Don't amend as that will raise red flags if you change personal use days.

Re: 1031 Exchange Personal Days

Anonymous — Mon, 19 Oct 2020 03:10:53 GMT

also you should read rev proc 2008-16 section 4. the 2 one year periods are not calendar years but fiscal years based on the date the exchange takes place

https://www.irs.gov/irb/2008-10_IRB#RP-2008-16

Re: 1031 Exchange Personal Days

Panthers71 — Mon, 19 Oct 2020 15:10:28 GMT

Thanks, I’m tracking 24 months preceding the relinquished property sale date.

Re: 1031 Exchange Personal Days

Panthers71 — Mon, 19 Oct 2020 15:11:06 GMT

Thank you for your response !