In truth, there is no minimum time period that dictates qualification. ” To qualify, an exchanger must have the intent to hold for investment. Intent is a subjective thing, so the IRS will look to objective factors that evidence the purpose for which property is held. Time is only one factor that may be considered in assessing the exchanger’s intent. Many other factors (in fact, “all facts and circumstances”) surrounding the taxpayer’s ownership and transfer of property may be considered in determining the taxpayer’s intent. Ideally, an exchanger could point to multiple factors to establish that the property is held for investment, such as a long period of ownership, a use consistent with an investment intent and a tax reporting history that demonstrates the investment use of the property.
Wednesday, February 15, 2012
Question regarding Holding for Investment
I got a question yesterday regarding "held for investment." Here it is: "What if I do a 1031, and two weeks after I buy the replacement property I sell it?" Answer: only property that is held for use in a business or held for investment qualifies under Section 1031 of the federal tax code. Some people think this means that if the exchanger holds the property for a certain period of time, the 1031 works, and if the holding period is too short, the 1031 doesn't qualify.
In truth, there is no minimum time period that dictates qualification. ” To qualify, an exchanger must have the intent to hold for investment. Intent is a subjective thing, so the IRS will look to objective factors that evidence the purpose for which property is held. Time is only one factor that may be considered in assessing the exchanger’s intent. Many other factors (in fact, “all facts and circumstances”) surrounding the taxpayer’s ownership and transfer of property may be considered in determining the taxpayer’s intent. Ideally, an exchanger could point to multiple factors to establish that the property is held for investment, such as a long period of ownership, a use consistent with an investment intent and a tax reporting history that demonstrates the investment use of the property.
In truth, there is no minimum time period that dictates qualification. ” To qualify, an exchanger must have the intent to hold for investment. Intent is a subjective thing, so the IRS will look to objective factors that evidence the purpose for which property is held. Time is only one factor that may be considered in assessing the exchanger’s intent. Many other factors (in fact, “all facts and circumstances”) surrounding the taxpayer’s ownership and transfer of property may be considered in determining the taxpayer’s intent. Ideally, an exchanger could point to multiple factors to establish that the property is held for investment, such as a long period of ownership, a use consistent with an investment intent and a tax reporting history that demonstrates the investment use of the property.
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