The Internal Revenue Service recently issued Revenue Procedure 2008-16, which spells out how vacation properties can qualify for 1031 exchanges. The guidance aims to clear up the debate over vacation homes, and whether they're an investment or personal use properties. To qualify for a 1031 exchange, the IRS says that the taxpayers must hold the property for 24 months. The holding period is broken further into 12-month blocks, and during each, the property must be rented at the fair market rate for no less than 14 days. Additionally, the owner can use the property for 14 days or 10 percent of the days rented, whichever is greater, plus devote a "reasonable" number of days to maintenance. Because it is a safe harbor ruling, experts say failing to comply with all the rules does not mean the exchange will be denied or an audit will automatically occur. However, they underscore the importance of keeping good records of the property's rental history and the dates the property was occupied by the owner for maintenance.