1031 towards a vacation home?

[Nik Moushon]

My father is getting toward retirement and is looking at selling one of his businesses he is a partner in. Once the business is sold could he take his share and use that in a 1031 to purchase a vacation/second home? I would think he would have to use it as a vacation rental to be able to qualify for a 1031 correct? If so is there a minimum amount of time it has to be rented to qualify? 

[Gregory H.]

There are some 1031 experts on here that should be able to help. However, 1031 is a like kind exchange, so unless the business interest he is selling is a stake in investment real estate, I don't believe you can 1031 it into investment real estate. Yes, he would have to use it as a vacation rental in the beginning. To qualify as an investment property I believe the minimum it can be rented for is 2 weeks per year. As for the IRS, 1031 is all about intention, so it can be a little hazy if all you did was rent it out for 2 weeks the year of purchase then never again. I'd say if you do it 2 consecutive years you'd cover your basis.