Capital Gains and 1031 Exchange Question

[Josh Garner]

Hey BP! I bought a property this year that I was planning to hold for 3-5 years, but after improving it, I may sell earlier than anticipated. I'll be 1031 exchanging the property into a new purchase (likely after owning it for 1 year, maybe less). In the meantime, I'll be using a cost-seg to accelerate the depreciation and have a big write-off in year one (2021).

Question: Since I'll be using a 1031 and deferring the taxes owed on the gains (+ depreciation recapture), is there any point in holding it for 1 year+ vs less than 1 year (as I assume that the tax implications would be different)?

Thank you!

[Wayne Brooks]

Well, the Intent, along with the holding period will be important in order to qualify for a 1031.

@Dave Foster has intimate knowledge of this.