By: Mike Kennedy mkennedy@railey.com 301-616-6106 June 18th, 2009 Category: 1031 Tax Deferred Exchanges, Deep Creek Lake Buyer Info, Deep Creek Lake Market Update, Vacation Rentals

Railey Mountain Lake Vacations, Deep Creek’s largest vacation rental company, is reporting that the vacation rental market at Deep Creek Lake is faring much better than other resort areas around the country.  With the slumping economy, vacation rental bookings are down nationwide about 18% from last year. In the Deep Creek Lake area rental bookings are only down about 10% from last year.

Other current happenings in the local vacation rental market include;

• - A positive sign is that 40% of all Railey Mountain Lake homeowners are ahead o f last year’s numbers. Not everyone is feeling the pain of this current slowdown. The other 60% are at the same level or down slightly.
• - On average each rental home is down about a week and a half of bookings this summer season.
• - The larger homes - the 9 bedroom and 8 bedroom homes - are still going strong. The 5 bedroom and 6 bedroom homes are currently lagging.
• - Renters are booking later and willing to sacrifice amenities for a lower price. Price is trumping everything right now to get bookings. If a property is priced properly compared to its competitors it will rent!
• - Some homeowners are being more flexible on restrictions to attract renters as well - such as allowing pets.
• - One of Railey Mountain Lake’s 9 bedroom pool houses set a record and went over $200,000 in gross rental bookings for the year.

In other positive news, future bookings for the 2009 fall season are already up 15% over last year. This may be due to the lower rates in the fall season and the fact the weather at Deep Creek in September and October is still very pleasant although certainly not hot by any means.

If you are thinking about renting your house or purchasing a vacation rental as an investment in the Garrett County area - give us a call at (800) 544-2425 or drop us an e-mail - there are some well performing rental houses currently for sale in the Deep Creek Lake area - as well as some houses that could be excellent rentals with some slight modifications. We’ve helped many clients over the years buy rental homes - we’ll be more than happy to get the buying process started for you as well. For those of you considering or in the middle of a 1031 tax deferred exchange this is one of the better performing resort markets in the country. Now is a great time to consider investing in real estate at Deep Creek Lake - inventory is up, interest rates are down, and there are some deals to be had.

By: Mike Kennedy mkennedy@railey.com 301-616-6106 March 14th, 2008 Category: 1031 Tax Deferred Exchanges, Deep Creek Lake Real Estate

This past week the IRS released a ruling that finally addresses some of the questions surrounding vacation and second homes and how they can qualify as a safe harbor in a 1031 tax deferred exchange. A 1031 tax deferred exchange is very common at Deep Creek Lake because of the mixture of homes that make up our market - a majority of vacation homes around the lake are used strictly for personal use on weekends, holidays, and summers - but we also have many homes where the owners will use the property for their own personal enjoyment and also rent it out as a vacation rental.

Previously, their has been a lot of grey area on this subject - the questions most asked were “How much personal use is too much if I want my property to qualify?” and “How long do I have to hold this property before it qualifies?”

With this ruling the IRS now says that if you own a vacation home and have some personal use in it, you should own it for at least two years before an exchange, rent it out at fair market value for at least 14 days in each of the 2 years, and limit personal use to 14 days or 10% of the days rented, whichever is greater. If you follow these guidelines and standards, the IRS states they will not challenge whether or not your property qualifies for a 1031 exchange.

The bottom line is that this is pretty good news for certain people looking to buy or sell a second home at Deep Creek Lake. This ruling can provide much more flexibility to someone down the road looking to change locations. For example, someone who now owns condo in Ocean City - uses it occasionally and has followed the rules above - can now sell that property, pay no taxes on any gain, and then buy something at Deep Creek Lake. However, it must be pointed out that the replacement property would also have to meet the standards above and a few other rules as well to qualify.

Disclaimer - as always this post should not be construed as any type of tax or legal advice. Consult with your CPA or Tax Attorney regarding for further explanation on these types of transactions.