First time 1031 exhange!

[Matthew Izarek]

If I'm looking to buy and hold a property as a rental for a few months with my wife and then choose to do a 1031 exchange for either another property or multiple, is this a good plan? Also we own a house currently and live in it. If we plan on buying another house just to rent it out, will a bank even approve us on one income?

[Dave Foster]

@Matthew Izarek, Nothing wrong with the plan.  Maybe the timing however.  In order for a property to qualify for a 1031 exchange it must be investment property you purchased with the intent to hold for productive use.  And while there is no statutory holding period most folks feel that holding a property more than a year so the property is on two consecutive tax returns demonstrates your intent.  In fact the mantra of the 1031 industry for years was "a year and a day".  But there is no statutory magic in that period.  There are other ways you can demonstrate your intent to hold as well.  But make sure you can.  Simply holding a property for a few months with the intent of selling quickly will not qualify your property for a 1031 exchange.