Just in time for the summer, the U.S. Tax Court denied the like-kind exchange treatment for vacation homes that are not strictly held for investment purposes.In a memo issued Wednesday, the court said that a Georgia couple's exchange of vacation homes did not qualify for the treatment according to Section 1031(a) of the tax code -- finding that the holding of any residence, even if motivated in part by an expectation that the property will appreciate in value, is insufficient to justify the classification of that property as being held for investment.

“[T]he evidence overwhelmingly demonstrates that petitioners' primary purpose in acquiring and holding both the … properties was to enjoy the use of those properties as vacation homes; i.e., as secondary, personal residences,” the court wrote.

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