1031 Exchange
Just a Question, I have a few rentals and recently started buying foreclosers I plan on flipping them. Does anyone know if you can do a 1031 exchange on these properties.
Just a Question, I have a few rentals and recently started buying foreclosers I plan on flipping them. Does anyone know if you can do a 1031 exchange on these properties.
Flip property is not eligible to participate in a 1031 exchange.
You must have the INTENT to HOLD the properties for rental, investment or use in a business. In your case, you are actually holding the properties for SALE and not for investment, so it would not qualify for 1031 exchange treatment.
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Is there a length of time I could hold them to qualify for 1031 exchange ?
If your only intent is to flip the property, then the property will never qualify for 1031 exchange treatment regardless of how long you hold it.
You must have the INTENT to HOLD the property for rental, investment or use in a business. If your return is pulled for an audit, you would have to be able to prove that you INTENDED to HOLD the property for rental or investment. If your intent has always been to flip the property it might be difficult to prove your intent. The best way to prove your INTENT to HOLD is do just that - HOLD the property for rental or investment. There is no stated holding period - hense the gray area. The majority of professional advisors, including myself, recommend a holding period of at least 12 months in order to clearly demonstrate that your INTENT was to HOLD the property.
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Thanks for your input it will be about a $50,000 capital gain.