Can You Do A 1031 Exchange on a Quick Flip? | Article by Al Aiello

The answer is yes, provided you know the law in depth and plan accordingly. But first some background.

A 1031 exchange is a great way to create wealth by saving substantial taxes on the sale of investment property by reinvesting the untaxed sales proceeds in a replacement (investment) property within the IRS requirements of Section 1031 including the applicable regulations, rulings, and tax court cases. One of these requirements is that the properties in the exchange must be held for investment or business use. This requirement is known as the “holding requirement”. The IRS interprets this “holding requirement” to mean that the relinquished and replacement property must be held for a certain time period. Therefore conventional thinking is that a quick flip of a property will not qualify for the tax deferral benefits of a 1031 exchange, because of this exchange holding requirement... (read the full article)