1031 Exchange Eligibility Mississippi

Courts that have analyzed 1031 exchange eligibility of a property have generally concluded that the requirements are met if the property is held “primarily for investment.” In other words, if there is objective evidence that the taxpayer’s primary motive is to hold the property for investment, then limited use of the property by the taxpayer for personal enjoyment will not destroy the investment character of the property.

Local Companies

Exit Realty Premier
662.842.7653
605 W. Main St.
Tupelo, MS
Great Southern Property Management
601-579-7368
5213 Old Hwy 11
Hattiesburg, MS
Loretta Davey, Realtor
601-473-9536
217 Hoy Road
Madison, MS
Re/Max Legacy Realty
662-234-5621
1923 University Ave.
Oxford, MS
Property Vestors
901-830-7636
4440 Liverpool Ln
Southaven, MS
Adams Homes
662-609-1111
6819 Crumpler Blvd, Ste 200
Olive Branch, MS
ELEGANCE REALTY MANAGEMENT CO.
601-826-1454
PO BOX 7596
JACKSON, MS
Bob Usey Properties
228-896-8888
P.O. Box 6488
Gulfport, MS
Exit Realty Advantage
601-434-1154
5182 Old Hwy.11 Suite 2
Hattiesburg, MS
Molpus Woodlands Group the
(601) 948-8733
654 N State St
Jackson, MS

1031 Exchange Eligibility

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Courts that have analyzed 1031 exchange eligibility of a property have generally concluded that the requirements are met if the property is held “primarily for investment.” Internal Revenue Code Section 1031(a) provides that:

"[n]o gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment" (emphasis added)

In other words, if there is objective evidence that the taxpayer’s primary motive is to hold the property for investment, then limited use of the property by the taxpayer for personal enjoyment will not destroy the investment character of the property.

 

Difficulties in determining intent

It is easy to frame the issue, but it is often difficult to determine whether the taxpayer’s investment intent dominates an intent to hold for personal use. This is especially true when the taxpayer holds a vacation property and uses it from time to time. The practical difficulty is compounded by the IRS's limited guidance concerning the requirements to prove that the property is held for investment. A recent Treasury Inspector General Audit report (“TIGA”) pertaining to the IRS’s enforcement of 1031 exchanges was critical of the IRS for its failure to provide guidance to taxpayers, thereby leaving unrebutted the claims of some promoters that vacation properties and second homes were generally eligible for exchange.

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Author: Scott Saunders
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Featured Local Company

Adams Homes

662-609-1111
6819 Crumpler Blvd, Ste 200
Olive Branch, MS
www.brittanyharrisrealestate.com

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