Reno Tahoe Real Estate News

In a real estate market, such as Truckee and Lake Tahoe, where the vast majority of owners are investors or vacation homeowners, 1031 exchanges are a common part of a transaction. Until recently the IRS was very vague in defining “investment property” so many people performed exchanges even on properties which they had never rented and held only for personal use. It was quite common to hear CPA’s and exchange facilitators say things like “well, since it’s not your primary residence and you bought the place in hopes that it would increase in value, it qualifies as an investment property.”

Those days appear to be over. The IRS has finally set out guidelines as to their definition of an investment property. As of early March 2008, an owner must rent the home at least 14 days a year (at a fair market rate) and can only inhabit the property for personal use up to 14 days a year (or 10% of the number of days rented, whichever is larger). This is a very important change for people to be aware of if they own a second home or rental.

Click Here to read a detailed article discussing the guidelines.

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