There are a variety of rules, regulations, and timelines that you need to follow when exchanging property in a 1031 transaction. One of the most common questions people have when it comes to 1031 exchanges is – “how long do I need to hold my property before I begin my 1031 exchange?” In this article, we are going to discuss how long you need to hold your 1031 exchange property for before conducting a like-kind exchange.
No Concrete Timing Rules
Although there are many timing rules associated with a 1031 exchange (such as the 180 / 45 days time frames), there are no concrete timeframes for how long you need to hold your 1031 exchange property before beginning your exchange. But we can infer some general best practices.
House Flippers Beware!
Exchanging flipped property in a 1031 exchange is a big red flag to the IRS. If it’s obvious that your 1031 exchange property was flipped property, the IRS is likely to deny your 1031 exchange – resulting in immediate taxable gain on the sale.
In general, it’s best to give yourself plenty of time before doing a 1031 on your property. The longer the better – but at least two years is a good starting point.
Defer Your Capital Gains Taxes!
At CPEC1031, our intermediaries have over twenty years of experience facilitating like-kind exchanges of real property for clients throughout Minnesota and across the country. Our intermediaries are well-versed in the exchange process and can prepare all of your documents, answer all of your questions, and advise you every step of the way. Contact our qualified intermediaries today at our downtown Minneapolis office to learn more about 1031 exchanges and how they can help you defer capital gains taxes on the sale of real estate!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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