Long-term Investments (vs. Short term investments)

A short-term investment typically does not qualify for a 1031 exchange. To be eligible for a 1031 exchange, the property being relinquished and the property being acquired must be held for investment, productive use in a trade or business, or for rental purposes.

The IRS has not provided a specific holding period requirement for investment properties to qualify for a 1031 exchange. However, the general understanding is that properties held for a short period, such as less than a year, are less likely to be considered held for investment purposes. The intention behind a 1031 exchange is to allow for the tax-deferred exchange of properties held for a significant period of time, promoting long-term investment strategies.

It’s worth noting that tax law interpretations can vary, and there may be exceptions or specific circumstances where a short-term investment could potentially qualify for a 1031 exchange. The intent behind a transaction does matter and circumstances can change and 1031 QualEx works with your accounting professional to determine if you transaction will likely qualify.