1031 Exchange of CA to CA, then from CA to out-of-state

[Elizabeth Goff]

I am selling a property in CA with a pretty hefty gain (great!) and would like to do a 1031 exchange to avoid cap gains taxes.  I think the opportunities outside of CA are better from a return standpoint, but am hesitant to go there due to the CA clawback provision.  I am thinking about exchanging into another CA property for now (and avoiding the cap gain taxes of upcoming sale), and then a year or two later I'd sell that property and then deploy that money out of state.  Presumably my gain will be much (less) on the second sell transaction in CA.

Are there any regulations on how long I must hold my 'new' CA property before selling it (and going out of state) to avoid CA taxes on first transaction?  Or any other considerations I need to be aware of?

Thanks in advance for any perspectives....

[Robert C.]

@Elizabeth Goff, I think you may have a misconception about how the 1031 Exchange works. You can't avoid the taxes from your first property by putting a second exchange in between. ALL taxable gains carry over for the rest of your life or until you choose to sell without exchanging. So if you plan on going out of state, you might as well do it now. 

I asked a similar question about clawback provisions a little while ago. Basically, the consensus is that you just need to fill out an additional CA tax form every year once you go out of state, and that can be done by your accountant. 

Anyway, going back to the first point, any taxable gain becomes moot as long as you continue to exchange your properties. Once you do a 1031 exchange, there's very little incentive to just sell outright and get hit by capital gains + depreciation recapture.