How long does the property need to be rental property in order for the property to qualify under the 1031 exchange rules? Put simply, if a property is rental property this year only, will the 1031 exchange apply? One typical safe answer is the “longer the better”. However, that is not much help.
Another answer is that the taxpayer must have actually intended to hold the relinquished property for investment/business purposes (when it was disposed of) in order to qualify. Many tax professionals think that a year of qualified use for investment/business purposes is sufficient. I have always felt better with two years because of an old PLR that said two years was sufficient.
Curious About Section 1031?
If you want to learn more about section 1031 of the Internal Revenue Code and how it can help you save on taxes when selling investment real estate, reach out to CPEC1031 today! Our qualified intermediaries have more than two decades of experience facilitating real estate exchanges of all shapes and sizes. We can prepare all of your 1031 documents and ensure that you fully understand the 1031 exchange process. Contact us today to learn more about our full range of 1031 exchange services. You can find us at our main office in downtown Minneapolis.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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