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Is the "Year-and-a-Day" rule The Law?
Recently,
we encountered a great deal of
confusion and consternation concerning
a 1031 exchange, and the so-called
"year-and-a-day" rule.
You've probably heard that you
should hold both your Old Property
and your New Property for at least
a year-and-a-day before and after
a 1031 Exchange.
However
(and this is a HUGE "however")
THE YEAR-AND-A-DAY "RULE"
IS NOT THE LAW. Nowhere
in Section 1031, the regulations,
tax court decisions, or any other
official authority will you find
any mention of a "year-and-a-day"
rule! The year-and-a-day rule
is really a guideline -- though
a sound guideline.
In
the May
2005 edition of The AZREIA
Advantage, and in
a future edition of The
Colorado Real Estate Journal,
we explain in greater detail the
"Year-and-a-Day" rule as it relates
to what the law really says: that
when you purchase either your
Old or New Property, if you did
not have a then-present intent
to resell the property, your 1031
Exchange can survive IRS scrutiny
even if you held the property
for less than one year.
The
“Year-and-a-Day” rule
is great advice, but it is not
The Law.
--The
Experts
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