Rental Pool Property Rules in a 1031 Exchange

1031 Property Rental Pool

Here's a common 1031 exchange question we get from time to time - how much personal use can you take on a replacement property put into a rental pool? In other words, if a taxpayer sells a Minnesota rental property in Minnesota and buys a rental condo in Florida, how much can they live in that Florida “investment” property without violating tax laws?

Rental Pool Property Rules

If the taxpayer puts the Florida property in a rental pool, they can have some limited mixed personal use: up to 14 days a year, or up to 10% of the time it is actually rented in a year. The IRS can test each of the two separate years after the exchange under the safe harbor. For more information on this topic, check out this article.

Contact a Qualified Intermediary

It's always a good idea to contact a skilled qualified intermediary if you have questions about any details surrounding your 1031 exchange.

  • 1031 Hotline: If you have questions about drop and swap 1031 exchanges with s-corps, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.


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