1031 Exchange a Property Held for Less than 60 days

[Josh Engelhart]

I closed on a little single family house for 46k on 4/30. The bones were great and with new vinyl floors, HVAC work, and paint I'm in it for about $55k total with 40k financed. I finished today and am ready to list it for rent. I think I'll get an easy 800 a month and my PITI payment is only 308. Yesterday a realtor literally comes to the front door of my house and tells me I outbid the developer she was representing and asks if I'd sell.

In this scenario am I am able to 1031 exchange the profit into a new deal?

I know there is normally a seasoning period for the original property but from what I've read it seems like your original intention is what really matters.

I had no intention of selling, but I also didn't know I might make a quick 30k. If a huge chunk of that is going to taxes it is much less attractive and I'd absolutely rather just rent it out. If I can legally roll all of it into my next deal it might be the right move. Any advice is appreciated.

[Dave Foster]

@Natalie Kolodij, I never thought I'd hear you sound like an accountant :)  There's a joker in this scenario that just might make it OK.

There's a long distance from basically a flip and actually a flip.  that difference is your intent @Josh Engelhart.  If your intent was to hold the property for productive use and you can demonstrate that wit past practice, documentation of conversations with your professionals, rental agreements, actual rent, etc then you could indeed do a 1031 because your intent was to hold and something external changed that intent.

And the unsolicited offer is the gold standard of something that can change your intent.  If you had no intention of selling and someone comes along and offers you more money than you can refuse that's a pretty good defense.

So, yes it's not a lot of time and it would be nicer if it were actually up for rent right now and you want to have your documentation in place if questioned.  But I'd get statements from that realtor and go from there.