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Holding period question for 1031 exchange
Hello experts,
I believe that for a full tax deferral of profits through a 1031 exchange, I need to have occupied the property for at least 2 of the last 5 years. A rental property that own was occupied by me for the first 18 months of the last 5 years, and was rented out for the remaining 3.5 years. If I sell this property today, would the sale not qualify for a 1031 exchange? Or does the tax due on profits get pro-rated in some way?
Thanks!
Nitin
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- Qualified Intermediary for 1031 Exchanges
- St. Petersburg, FL
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@Nitin Dhiman, Although there's no statutory holding period, holding period does help to establish that property as investment and not inventory. Seems to me you've clearly demonstrated your intent to hold the property for productive use. You're good to 1031.
However remember you must have a qualified intermediary in place prior to closing your sale and there's some other very specific requirements that can trip up an exchange.
- Dave Foster
