Common 1031 Exchange Questions: How long do I have to own the property?

Section 1031 of the IRS code provides an investor with a huge opportunity for creating wealth and preserving gains through tax deferral. However, the tax code does have many gray areas that lead to some important questions with no clear answer. One common question is what length of ownership is appropriate for an exchange?

The short black and white answer is: the longer the better. The gray are lies in the fact that the IRS has no specific time limits written into the 1031 tax code but there are anecdotal guidelines that seem to be generally accepted. Many tax professionals advise that property held longer than 2 years is typically approved while a hold time of less than 12 months (“a year and a day”) can raise red flags. The most important factor to consider is what the intention was at the time of purchase. The purchase cannot be a quick “flip” for profit but rather a long-term hold. It is advisable to speak with a tax professional to discuss individual circumstances.

For all your answers on 1031 exchanges call the 1031 exchange specialists at 866-405-1031