Property Guidelines
For relinquished property, you must pass both of the following tests.
First Test: You must have owned it for at least 24 months immediately before the exchange.
Second Test: Within each of the two 12-month periods during the 24 months immediately preceding the exchange: (1) you must have rented out the property at market rates for at least 14 days, and (2) your personal use of the property could not have exceeded the greater of 14 days or 10% of the days the property was rented out at market rates.
For the replacement property, you must pass both of the following tests.
First Test: You must continue to own it for at least 24 months immediately after the exchange.
Second Test: Within each of the two 12-month periods during the 24 months immediately after the exchange: (1) you must rent out the property at market rates for at least 14 days, and (2) your personal use of the property cannot exceed the greater of 14 days or 10% of the days the property is rented out at market rates.
Warning: To be eligible for the new safe harbor, your vacation property must be a dwelling unit — which means a house, an apartment, a condominium, or a similar structure that provides basic living accommodations, including sleeping space and bathroom and cooking facilities.
Posted by Suzanne Morris of Ideal Investment Corner http://idealinvestment.blogspot.com/
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