Thanks to IRC Section 1031, a properly structured exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes.  Yes, you can use this on many lake home and condo sales.

 “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”

To understand the powerful protection a 1031 exchange offers, consider the following example:

An investor has a $100,000 capital gain and incurs a tax liability of approximately $35,000 in combined taxes (depreciation recapture, federal and state capital gain taxes) when the property is sold. Only $65,000 remains to reinvest in another property.
Assuming a 25% down payment and a 75% loan-to-value ratio, the seller would only be able to purchase a $260,000 new property.
If the same investor chose to exchange, however, he or she would be able to reinvest the entire $100,000 of equity in the purchase of $400,000 in real estate, assuming the same down payment and loan-to-value ratios.
The definition of “like-kind” is very broad and often misunderstood.  You MUST SET THIS UP PRIOR TO CLOSING, you cannot exchange after you have closed or received any proceeds from the sale. This is a powerful wealth building tool, call Pinnacle Real Estate Partners today to find out the many possibilities to utilize 1031 exchange to its full potential.