1031 Exchanges- All you need to know.

A 1031 exchange only applies to investment or business-use property. Unfortunately, vacation homes and second homes used solely for personal enjoyment are specifically excluded. But here's the good news: resort rentals are not. 

In fact, the IRS gave us a helpful playbook in Revenue Procedure 2008-16. It outlines a "safe harbor" that allows you to convert your vacation home into a property eligible for a 1031 exchange as long as you meet some clear standards. To make the property qualify: 

• Rent it out — You must rent the property at fair market value to an unrelated person for at least 14 days per year for two years before you sell. 

• Limit your own use — Your personal use must not exceed the greater of 14 days or 10% of the time it's rented during those same years. 

• Plan ahead — This is not a retroactive fix. You'll need to show the IRS that your intent and use match these standards over time. 

If you're willing to follow these steps, you could successfully convert a personal-use home into a qualifying investment property and use a 1031 exchange to defer your capital gains tax. It does require some forethought, but the tax savings could be well worth the effort. If you're curious whether this could work for you, contact me.

When it comes to building long-term wealth through real estate, few tools are as powerful as the 1031 exchange. Whether you own a rental condo in Snowmass, a duplex in Denver, or land on the Western Slope, a 1031 exchange allows you to defer capital gains taxes when selling one investment property and purchasing another. For Colorado property owners and investors, this strategy can be a smart way to reposition assets, upgrade locations, or expand a portfolio—all while keeping more of your money working for you.

Colorado’s dynamic market—from thriving metro areas to high-demand resort towns—offers unique opportunities for investors who understand how to navigate the exchange process. In this post, we’ll explore how a 1031 exchange works, why it’s especially valuable in Colorado, and what steps you’ll need to take to make the most of this tax-advantaged strategy.

Contact me to guide you through the 1031 Exchange process and to connect you with the experts.