Rental properties have many great benefits including favorable tax benefits with the IRS. Not only can you depreciate rental properties to save on taxes, but a 1031 exchange allows you to sell a rental property and defer the taxes on any profit you make or recaptured depreciation.

What is the holding period for exchange rental property?

Keep in mind that you will have 45 days to find a property and 180 days to complete the exchange. Any delay on these time limits could cause you to pay capital gains taxes. As an investor, these exchanges can be useful in a variety of ways.

How long do I need to hold 1031 property?

Typically if your property fits perfectly into the 1031 box (say a pure rental), I would say 1 year is long enough to hold a property for an exchange, again as long as your intent is to stay in real estate and not cash out. Feel free to contact Midland 1031 with any questions at (239) 333-1031.

Can a rental property be used as a 1031 exchange?

It’s possible to buy an investment property through a §1031 exchange, rent it out to tenants, and later use 1031 exchange property for personal residence. After all, intentions may change later when you’ve collected rent at fair market value (FMV) for a significant period.

What does 1031 mean for like kind property?

In a typical IRS qualified §1031 like-kind property exchange, investors defer paying capital gains, depreciation recapture, and income taxes on commercial investment property when it’s sold. Like-kind does not mean identical property, but it certainly excludes (with a twist) exchanges for primary residences.

What is the holding period for a 1031 exchange?

First, if investment property is held for 12 months or more, the investor’­s tax returns will reflect this fact in two tax filing years. Second, in 1989, through HR 3150, Congress had proposed that both the relinquished and replacement properties be held for one year to qualify for tax-deferred treatment.