Maximize your 1031 Exchange with short-term rental investments

For 1031 exchanges, most US investment real estate qualifies — single-family homes, multi-family properties, vacation rentals, commercial properties, and vacant land. Short-term rentals held as investment properties qualify, provided you intend to hold them for investment purposes (not immediate resale).

Yes, with conditions. The IRS requires that the property be "held for investment." In practice, this means your personal use must be limited — generally no more than 14 days per year or 10% of the days the property is rented, whichever is greater. Chalet's agents and our tax advisor network can help you structure this correctly.

Five rules are non-negotiable: (1) Use a qualified intermediary — you cannot receive the sale proceeds directly. (2) Identify your replacement property in writing within 45 days of closing. (3) Complete the purchase within 180 days. (4) Reinvest all proceeds — any cash you receive ("boot") is taxable. (5) The replacement property must be equal or greater in value to the relinquished property.

Missing either deadline disqualifies the entire exchange. The full capital gains tax becomes due on your original sale — there are no IRS extensions for missed 1031 deadlines (except for certain federally declared disasters). This is why working with an agent who understands the timeline is critical.

Yes — and this is one of the most powerful tax strategies for STR investors. After closing on your replacement STR through a 1031 exchange, you can commission a cost segregation study on the new property to accelerate depreciation and generate significant year-one paper losses. Chalet can connect you with specialists who handle this combination strategy.

Not technically — any licensed agent can help with the transaction. But in practice, 1031 exchanges have tight deadlines, specific documentation requirements, and coordination needs between the agent, qualified intermediary, and title company. A specialist significantly reduces the risk of a procedural error disqualifying your exchange.