1031: hold time before I can roll into another property.

[Tom Henderson]

Team, looking at doing another 1031 on 2 properties just purchased, renovated and leased-out. The IRS says I need to have 'intent to hold' property.  

What exactly does that mean? Is it more intent focused to lease and maintain the asset, or is there a timeframe needed to hold the property before I can trade up again. 

Thanks in advance for the suggestions. 

[Dave Foster]

@Tom Henderson, There is no statutory holding period.  Intent really is what you say it is - and what you can demonstrate.  Investor comfort ranges are wide.  Most folks do feel comfortable at anything more than a year.  The mantra in the industry used to be "one year and one day".  This expression came about as a combination of the shift of profit from ordinary income to capital gain, the fact that the property is reported on two consecutive tax returns, and attorney interpretations of some old case rulings.  But there's nothing magical  or statutory about it. And since so few are ever audited it is difficult to create a large enough bank of case law to made hard and fast determinations.  

It's what you intended and how you acted.  In your favor - You put renters in.  Against you - You haven't owned the properties very long.  Follow up questions that could demonstrate your intent would be things like "What is your normal business practice?"  "Why are you selling these?".  "Is this truly an accident or an accident that seems to keep happening?"  

There's always reasons why a longer or shorter holding period might be justified.  Examine your intent and act according to the facts.  I'd never recommend that you do something just because you can get away with it.  But likewise never don't do something just because it might be questioned.