How long must a property be in your name before it can be 1031?

[Vincent Chin]

Relatively new here, thanks in advance for answering my question.

For context, I own a property with several relatives on the deed as basically caretakers, but the property is understood to be mine; we'd like to take their names off of the deed, and then utilize 1031 rules to change into another property.  (My understanding is that the ownership must remain identical in both the before-and-after properties for a 1031 exchange.)

Is there a minimum amount of time that it must be only in my name before I can use the 1031 exchange?

[Leslie Pappas]

Hi @Vincent Chin, there is no specific holding period requirement for either the relinquished or replacement property. Time is less important than the investor’s intent at the time of acquiring the property (did the investor intend to hold the property as an investment).

Taxpayers who hold their relinquished property for two years satisfy the requisite intent for a 1031 Exchange (or two tax reporting periods, since in an audit the IRS may look backwards and forwards two tax returns). A holding period of over a year has generally been accepted, but may be subject to review by the IRS. A much shorter holding period has been accepted, where a change in circumstances indicates that the taxpayer had intended to hold the property for a longer period. The IRS will look at ‘investment intent’ and will call a taxpayer quickly flipping property a ‘dealer’ vs. an ‘investor’.