when can i use 1031 exchange -need advice

[Bo Qosja]

hi - purchased my property in January 28th and just sold it and signed the contract on 10/21.  Just spoke to a 1031 exchange lawyer and he said that this is not a good scenario and I cant do a 1031 exchange, that i did not hold the property for long enough time and i would surely be audited by the irs if i did this.  Does anyone have any advice? how do you guys do it? the profit is around $100k so the tax hit would be huge. I am planing on purchasing another property right away.  Not sure what to do here. Any advice would be appreciated.  

[Dave Foster]

@Bo Qosja, nope not saying that exactly.  I'm saying that it is not the time period that is the final judge on whether or not you can 1031.  It is your intent.  If your intent was to buy it evict the tenants fix it and sell it then you cannot do a 1031 even if you have owned it more than a year because your intent when you bought it was primarily to resell it.  Your actions will demonstrate your intent - letters to CPA/realtor, what you did with the rentors immediately.  Did you put if up for rent after evicting and fixing, etc etc.

If your intent was to buy the house in foreclosure and you intended to hold it but something happened like the tenants you thought you had turned bad.  Or you couldn't rent it for the right amount, or .... then you may have a case.  Again,  your actions will demonstrate your intent.

In general longer is better but, the same hold period with different intent will show different actions and it is these types things that will be looked at by the field agent if you are ever audited.