August 28, 2007
When Does Rental-Property Qualify For An Exchange?
Get Flash to see this player.
(Listen Here 3:35 min)
Q:
How long does the property need to be rental property in order for the
property to qualify under the
1031 exchange rules.
Put simply, if a property is rental property this year only, will the 1031 apply?
Put simply, if a property is rental property this year only, will the 1031 apply?
A: One typical safe answer is the "longer the better". However, that is not much help.
Another answer is that the taxpayer must have actually intended to hold the relinquished property for investment/business purposes (when it was was disposed of) in order to qualify.
Many tax professionals think that a year of qualified use for investment/business purposes is sufficient. I have always felt better with two years because of an old PLR that said two years was sufficient.
