Can a Property being worked on (not rented) qualify as a 1031 ?

[Steve Hungerford]

Can a property that is being worked on for about a year qualify as an investment property for a 1031 exchange ? 

The property was not in good enough shape to rent and I was working on the property after my dad moved out. I am trying to get it in good enough shape to rent it out, but might just want to sell it now.

Thanks!

[Dave Foster]

@Steve Hungerford

You have to be able to demonstrate that when you took possession of the property that you had the intent to hold it for productive invest use (if you intended to rent it out that would qualify). If a problem arises with the property you can 1031 earlier than usual as long as it's clear that your original intent was for investment. And that intent changed.

The QIs you're speaking to are probably concerned more about your intent than the holding period. There is one large case where a developer held a property for over 10 years and had his exchange disallowed - Because he had a for sale sign in the yard for the entire time.  An extreme example.  But make sure you can demonstrate your intent.