A recent 2012 Tax Court case, which allowed a coupleto move into their 1031 replacement property eight months after the purchase, will once again excite those investors who focus on intent, rather than a minimum holding period to qualify for a 1031 exchange.
Section 1031 says that to be eligible to do an exchange, you have to have intent to hold the property as an investment, and if your intent is to hold the property for resale, you're not eligible to do an exchange. The problem with all this is that Section 1031 does not define the terms intent, investment or resale.
A large body of investors and investment advisors hold that if your intent is to hold the property for a profit, then you qualify for a 1031 exchange regardless of the holding period. Over the years we've dealt with attorneys and CPAs who insist that if you have a profit intent, you should be able to exchange a property that you've owned for as little as a day or two.
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