1031
I'm very new to this, so please bear with me. I'm currently in the process of of purchasing a condo. The home is not built yet, and it will not be built for a couple more months. The current builders for my condo are starting to build a new set of condos in Feburary 05. Here's my question: Can I do a 1031 exchange if I have not rented out the property for a year? The property has already gone up in value of 45,000 in gains. Is it possible to just get pulling equity out of properties to put as downs for new ones? I dont want to spread myself to thin, so I'm trying to look at pretty safe ways to invest. Any advise would be great.
It sounds like the scenario that you are proposing is to put a deposit down on a condo, acquire it and then sell it as soon as possible and then do it all over again. This strategy does not technically qualify for 1031 exchange treatment. You must have the intent to HOLD the properties (both buy and sell) for rental or investment. Your strategy can be profitable, but it is actually a strategy of HOLDING for SALE and NOT investment. Here is a link to an article that I wrote on the TCI web site for more complete information:
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=572.
[addsig]
If the condo you have not yet settled on has enough equity, do a cash out refinance to get the downpayment money you want to acquire another property.
No tax consequences when you refinance.