Archive for the '1031 Exchanges' Category
Honolulu 2nd Home Seller?
April 23rd, 2008 categories: 1031 Exchanges, Reasons To Sell
I received an email update from Cindy Naito, of First American Exchange Company, regarding the tax treatment of a second or vacation home. Goods news. Until now it was generally understood that a seller could not use an IRC Section 1031 Exchange to defer the capital gains tax on the sale. Based on this update, it appears you may be able to qualify for 1031 treatment! Given the number of second and vacation home owners in Honolulu, this is a terrific idea. NOTE, IF YOU HAVE A VACATION HOME AND ARE THINKING ABOUT USING A 1031 TAX DEFERRED EXCHANGE AS A PART OF A SALE, GET ADVICE FROM YOUR OWN TAX EXPERT TO DETERMINE IF YOU QUALIFY.
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Revenue Procedure 2008-16 - Safe Harbor for Exchanges of Vacation Homes and Conversions to or from Personal Residences
This revenue procedure, which will be effective for exchanges occurring on or after March 10, 2008, establishes a safe harbor regarding when a vacation home can be considered investment property and traded in a §1031 exchange. The ruling states that a vacation home qualifies for a §1031 exchange if the investor owns the home for at least 24 months, rents it for at least 14 days for each 12-month period, and uses it no more than the greater of 14 days per year or 10 percent of the number of days during the year that the home is rented. These requirements apply to both the relinquished and replacement properties.
For purposes of this revenue procedure, a vacation home, also called a “dwelling unit” in the Revenue Procedure, is real property improved with a house, apartment, condominium, or similar improvement that provides basic living accommodations including sleeping space, bathroom and cooking facilities.
Source-Cindy Naito, First American Exchange Company
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Reasons To Sell Your Honolulu Real Estate-1031 Exchange
April 16th, 2008 categories: 1031 Exchanges, Reasons To Sell
Before you consider an IRC Section 1031 Tax Deferred Exchange you will want to seek counsel from your financial advisor, CPA, accountant, attorney and qualified experts in 1031 Exchanges.
After all of my chatter about the value of owning Honolulu real estate, I’ll bet you’re wondering, “Why should anyone ever sell something they own in Honolulu?” And my answer is, the only reason to sell is if you have something better to do with the money or if you can do something with it that is more meaningful to you. I will spend the next few months writing blogs about “Reasons To Sell Your Honolulu Real Estate”. This blog is the first of what will be many installments in this series.
Let’s assume that you live in the outside Hawaii and have owned a property here for the past 20 to 30 years. You were stationed here with the military, your career brought you or you are someone who grew up here. In any case, you don’t see yourself moving back to Honolulu and you have all of this equity built up in your piece of the rock. Homes in Honolulu can easily be $1,000,000 and condos can cost $500,000. If you sell, you are looking at a combined State of Hawaii and federal capital gains rate as high as 22.25% of you long term gain. Read the rest of this entry »
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