The Internal Revenue Service has issued Revenue Procedure 2008-16, which provides a safe harbor under which the IRS will not challenge whether a property that is rented to others but also occasionally used by the owners for personal purposes qualifies as property that may be exchanged in a like-kind exchange under Section 1031 of the Tax Code.
Section 1031(a) provides that no gain or loss is recognized on the exchange of property held for productive use in a trade or business or for investment (relinquished property) if the property is exchanged solely for property of like kind that is to be held either for productive use in a trade or business or for investment (replacement property).
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