Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
Buying & Selling Real Estate
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 7 years ago on . Most recent reply

User Stats

13
Posts
10
Votes
Said Aliyev
  • Vienna, VA
10
Votes |
13
Posts

1031 Exchange Rules??

Said Aliyev
  • Vienna, VA
Posted

Hello Bigger Pockets community,

   I began investing in real estate a couple years back and recently completed my first fix and flip. I am wondering if there is any good information about the 1031 exchange rules. I understand I have to identify some properties within 45 days and close within six months. Is there more to it than that? I guess my questions are: Is there anything else that I need to know? Anything else to consider? Any tips based on your experiences? Thank you! 

  • Said Aliyev
  • Most Popular Reply

    User Stats

    875
    Posts
    947
    Votes
    Clayton Mobley
    • Birmingham, AL
    947
    Votes |
    875
    Posts
    Clayton Mobley
    • Birmingham, AL
    Replied

    @Said Aliyev the primary issue for you will be the fact that this property was purchased as a 'fix and flip'. the 1031 exchange is only valid for long-term investments, not short-term flips. While sometimes even long-term investment props end up being sold fairly quickly after purchase, the IRS requires that you be able to demonstrate your intention to hold the property long-term when you bought it. The fact that you have referred to it as a Flip in writing doesn't aid you in proving that intent.

    There's no hard and fast rule, but the general consensus is that you need to have held the prop for 12-18 months in order for the IRS to feel ok about your intention to hold the prop as a rental long-term. But, even if you have held it that long, if it is clear that you bought it with the intention of flipping it, the IRS considers that inventory, not a long-term investment, and the 1031 would not apply.

    Hope that helps!

  • Clayton Mobley
  • Loading replies...