1031 exchange hold requirements

[Joe Lambert]

I cannot find any hold time requirements for real estate.  Does anyone know of any cases or IRS restrictions on using the benefit of a 1031 to flip a property you've held for under 2 months?

[Christopher Phillips]

@Joe Lambert

Comes down to intent. You can't use 1031 exchanges for flips held for 2 months.

If a property was purchased for inventory to be flipped, you can't use a 1031 exchange.

The property must have been purchased for the purpose of holding as an investment and should be held for at least 12 months or more. It would have to be sold in exchange for an other investment. So, you wouldn't be able to sell it in exchange to get into a flip.

If you can't sell it, rent it out and hold it for 12 months or more, but even then, it's touchy because that wasn't the original reason for the purchase.

If you decide to rent it out and hold it, talk to a tax professional now so you can do everything the right way.