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Q. How long must I hold real estate for investment to qualify for
exchange treatment?
A. There is generally no easy answer to this question; IRC 1031 does not have
a specific holding period (except for exchanges between family members) and the
Internal Revenue Service regulations do not address this question.
The test is the taxpayer's intent. A taxpayer who acquires a property
intending to hold it for investment qualifies for exchange treatment, even if
that intent later changes. Thus, a taxpayer who acquires a house intending to
hold it for investment, and rents it out for a few years, would satisfy the
"hold for investment" test, even if he or she later decided to move
into the house and make it a personal residence. The taxpayer's intent is a
question of proof. An attorney or an accountant can assist you in determining
how to satisfy this requirement. Other exchange services will not give you legal
or accounting advice, and will expect you to sign a waiver saying they did not
give you such advice. Get sound advice from a licensed professional!
Rice & Stallknecht, P.C. would be honored to
assist you.
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