Short-Term Rentals and a Tax Break

We’ve been talking a lot about the intersection of real estate and short-term rentals and today we continue to do so with another related topic: 1031 exchanges.

For the uninitiated, in the U.S., 1031 exchanges involve swapping one income property for another for a tax advantage — transferring capital gains from a relinquished property to a newer one while allowing the investment to grow while deferring tax payments. For those eligible for a 1031 exchange, taxes from the sale are postponed until a future sale, potentially spanning several years.

Naturally, I was curious to know if these exchanges are popular among vacation rental and short-term rental property owners. 

The simple answer is yes. 

“I've had a lot of customers reach out to me regarding the 1031 exchanges. Right now it's really hot amongst rental property owners,” said Cathyana Jean-Baptiste, founder and CEO of Skinny Tax, a Los Angeles-based account