News: Front Section
Posted: June 9, 2017
Summertime in New England - by Patricia Flowers
Property Exchange Services, Inc.
Vacation time planning in New England is finally underway, with the summer months upon us. Born and raised in N.E., rather than buying one place for our family getaways, my parents believed it was better to experience different places by renting in various locations each summer. When we were younger the fun included the Martha’s Vineyard Gingerbread Cottages and jumping off the bridge. Sharing a large rental house with friends on the Cape, up and out by 8 a.m. to be sure we secured a parking spot at the beach for a day filled with body surfing, building sandcastles, netting baby fish and playing whiffle ball until dinner time. Other years, we rented on the Hampton/Seabrook N.H. Coast, hanging at the beach and trolling the arcades, bumping into hometown families wherever we went.
Now as parents we’ve followed the same vacation rental theory, experiencing all those fun-filled places with our children, but as they have gotten older our activities have changed. The favorites the last few years have included the Maine coast for surfing, kayaking, tubing and the drive-in theater!
In talking with those who own rental property, I find many have outgrown or outlasted their investment property. They are tired of managing the seasonal rentals, ready to sell and move on. However they hold on to it, not sure where to go next, or how to sell without paying enormous amounts of taxes that would be due on sale. In many cases that could amount to the seller losing almost one-third of their equity to the government.
Advisors and investors alike come to us for strategy and education on how to balance personal use with investment use of the property, so as to take fullest advantage of the vacation/second home tax regulations when selling.
Vacation and second home rental sales as part of a 1031 Tax Deferred Exchange are a great estate planning tools - a way for property owners to keep their equity, defer the taxes and move on to new investment real estate suitable for the next stage of their lives.
Patricia Flowers is vice president for Investment Property Exchange Services, Inc. (IPX1031), Boston, MA.
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