How long must I hold a property to use 1031

[Account Closed]

Hey gang! So how long do I actually have to hold/rent a property that I rehab in order to take advantage of the 1031 exchange?

[Dave Foster]

@James Thomas Nakashian, that is the current qualification for the primary residence exclusion of sec 121.  It lets you take gain tax free not tax deferred.  But it is only for your primary residence.  Investment property cannot use sec 121.  Investment property can only be sold tax deferred through a 1031 exchange.  And beware the current tax bill is proposing an extension of the residency requirement from 2/5 to 5/8.

@Account Closed said, if your intent is primarily to flip it then you cannot do a 1031.  You must establish the intent to hold for productive use.  For years the mantra has been 1 year and 1 day because that always crossed into capital gains treatment, it put the property on two consecutive tax returns, and satisfied some archaic case law language.  Most folks still feel comfortable at more than a year.  But intent is more accurate and can express itself in holding periods of more than or less than a year.