What is a 1031 Exchange? The 1031 refers to the section of the U.S. tax code which allows real estate investors to “trade” like property for like property. Using this strategy, investors don’t have to make an actual trade with another investor. An investor can sell an investment (land, rental, commercial—not a primary residence or international property), use an exchange company to hold the proceeds in escrow, and buy another property of equal or greater value deferring the capital gains.
There is no limit on the number of exchanges you can make. And an investor is able to “exchange” vacant land for a vacation rental or any other type of qualifying property. The three primary 1031 exchange rules are:
- The replacement property should be of equal or greater value to the one being sold.
- The replacement property must be identified within 45 days.
- The replacement property must be purchased within 180 days. [This makes the purchase of new construction almost impossible.]
So, let’s say you own a rental property in Los Angeles County. The property has appreciated tremendously over the past few years. Property taxes are through the roof and the laws governing rentals favor your tenants. Why not take those proceeds and roll them over into a Park City vacation rental? You and your family can have a home base for ski vacations and rent the property while it’s not in use. We have several high-quality property management companies who will do all the work and just send you monthly checks.
Current Park City Investment Properties Under $1M
Sound like a plan? Here are some properties currently on the market and under $1,000,000 that would make great vacation rentals:
1385 Lowell, #106, Park City Village
This one bedroom has a lockout so it can be rented as two separate units. Step out your door and on to the snow at Park City’s Mountain signature base chair lifts, Payday and Crescent. $700,000.
401 Silver King Drive #44, Snow Flower
Two bedrooms/2 baths. Step out your door and be on the snow at Park City Mountain’s First Time chair lift. $945,000.
3000 Canyons Resort Drive, Lodge at Westgate
The studios always seem to have the best return on investment and there is one on the market right now for $474,000. Or opt for one of the recently updated 1-bedroom units priced in the $700,000’s. Either way, you will walk out the building to the Canyons Village, enjoying easy access to the gondola and the new Pendry ski beach and restaurants.
1288 N Deer Park Circle, #203, Village at the Shores
This 3 bedroom/2bath townhome is located close to the new Mayflower ski resort on the east side of Deer Valley. $995,000.
14274 Buck Horn Trail, Black Rock Ridge
These 2-bedroom, 2-bath condos were recently built and priced in the $600’s. Located next to the Black Rock Luxury Resort where you can stop for pre-skiing smoothies and apres ski cocktails. Now is a great time to purchase a vacation rental, so you can get it into the 2022-23 winter rental pool.
We have lots more ideas! Call or email Nancy or Justin to discuss property types and the use of a 1031 exchange.