Under the like-kind exchange rules of IRC Sec. 1031 , property in an exchange must be held either for productive use in a trade or business or for investment. The taxpayers sold an apartment building and then purchased a single family home for rental purposes in a like-kind exchange. They were eventually forced to sell their personal residence and move into the rental property due to their inability to find renters after a number of months and because of significant personal expenses they were facing. The Tax Court ruled that the taxpayers held the rental property with investment intent at the time of the exchange based on: (1) advertisements and showings to potential renters, (2) a wait of almost eight months before moving in, (3) the sale of their personal residence almost six months after purchasing the rental property, and (4) testimony about the taxpayers' desire to move only after their children were out of high school. Patrick Reesink , TC Memo 2012-118 (Tax Ct.).
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