Thursday, February 7, 2013

Exchanging an RV

Q.  Will an RV qualify for an exchange the same as an apartment building?

A.  Technically it could qualify for an exchange under code section 1031, but the likelihood of that happening is between zero and zilch.

First, when is the last time you heard of anyone selling an RV at a gain? If you don't recognize a gain on sale, there is absolutely no point in an exchange.

Second, an exchange only pertains to business property. Even if you had established a percentage of business use for your RV, after allocating the business vs the personal usage, you are down to a very small number.

Third, you would need to establish business usage of the property (RV in this case) you exchange into. This is no easy task.

Rather than wave every shade of red flag on your tax return daring the IRS to scrutinize it, I personally would pass.

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