What Qualifies for 1031 Exchange?

[Jake]

Hi guys. Does anyone have experience with the 1031 exchange rule? Specifically I was wondering what kind of property qualifies for this?

Let's say for example you buy a property for rehab purposes. You fix it up and sell it 6 months later. Would this qualify for the 1031? Also, would it make any difference if you lived in the house (as a primary residence) for the duration of the renovations?

Thanks,
Jake

[AggieTX05]

Jake,

I haven't had the chance to take advantage of the 1031 exchange yet but I have talked with several CPAs about it. They generally said while the timeline isn't specific on an "investment property" but 1-2 years (2 years preferred) is a common rule.

I was told <1 year would be considered a flip/trade and the 1031 couldnt be used.

Not that the above is fact but its just what I have heard so far. It's really what your plans are when you buy it and what you do with it while you own it I think. Let me know if you find out differently.

Oh and I hear your an Aggie too. What class?

-Chris '05

[Jake]

Thanks, Chris. One year would work out ok for what I have planned. I guess I should talk to a CPA myself.

Oh and yeah, I'm an Aggie...class of '99 (whoop!) - Civil Engineering.