Updated almost 8 years ago on . Most recent reply
First Fix and Flip, 1031 Exchange
Hey BP friends. It's been a long time coming but my business partner and I just closed on our first property. We're aiming to do several buy and holds but this property will be a fix and flip. My question for everyone, hopefully there's an accountant that can help answer the 1031 question, can I make this fix/flip qualify for a 1031 exchange?
From everything I've read and listened to (thank you BP) I am not able to do a 1031 exchange unless (a) the property generates income or (b) the property has been held for a year + 1 day.
Thanks,
Greg B.
Most Popular Reply
Greg Betts
It’s not about holding time, there isn’t a time mandate, but more about intent when you purchase the property and when you relinquish the property.
The intent is rather subjective. Most people will suggest holding it for at least 2 years. However, use of the property is more of an important factor than time.
Since you purchased it as a flip, it is being held as inventory and doesn’t qualify. If you can’t sell it and decide to rent it out instead, that would change your circumstances. But it isn’t enough to place a tenant in there and then try to sell right away, you have to rent it out and have the intent to hold it, which can be established by length of being in service as a rental.