Like-kind exchange - any holding period before personal use?

[KJ Judd]

My client acquired a FL investment property through a like-kind exchange on 7/1/05. He's now considering designating it as his second home for purposes of the home mortgage interest deduction in 2007.

I can't find any guidance if he needs to hold it for investment for a certain period of time after the like-kind exchange. I don't want this designation to void the $600k gain we deferred in 2005. Any thoughts on this?

I also need to determine whether the dwelling qualifies as a residence for him (i.e. how long did he live there in 2007).

[BHoffman]

Try a google search for "1031 holding period". Most info says 2 tax years. There is no cut-and-dried time limit.

[okie1tax]

My text also says 24 months, 1st 12 month period starts the day after the exchange and the 2nd 12 month period starts the day after the 1st period ends. ANY personal use prior to the end of the 24 months voids the 1031 exchange.

[solomon]

My text also says 24 months, 1st 12 month period starts the day after the exchange and the 2nd 12 month period starts the day after the 1st period ends. ANY personal use prior to the end of the 24 months voids the 1031 exchange.

And what might that "text" be named?

[okie1tax]

An Accountant's Guide to Like-Kind Exchanges published by the University of Illinois Tax School quoating Rev Proc 2008-16.

[les grans]

If you haven't read the new Rev Proc, you're behind in your reading! It provides a safe harbor for vacation homes that are also rented, and that will be relinquished in or have been acquired by like-kind exchange!!
It can be found here: www.irs.gov/pub/irs-drop/rp-08-16.pdf