1031 for a Rehab?

[Becky Nichols]

I'm new to the investment world and trying to learn everything I can from all you smart and educated people here (big thanks to @jonholdman)!

I went to a financial / flipping seminar and listened to this strategy of how to make $ with little to no taxes....

You rehab a house; file a 1031 exchange with IRS before closing, and purchase another house to rehab within 45 days.... after this rehab (or maybe a 3rd if needed) you then put those earnings into a buy & hold property by way of a trust (grandchildren, child, etc). This trust can't be taxed for 5 Generations. Now you are earning the monthly rental income from this property, and have avoided large taxes.

Has anyone done this, or know if it's legit?

http://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031