Posted by Mike W - LV on July 13, 2005 at 23:05:19:
Ryan,
IRS section 1031 is a federal law. Florida and Maine have nothing to say about it. Try reading the law. It worked wonders.
Go after it!
Mike W - Las Vegas, NV
1031 exchange - Posted by Ryan
Posted by Ryan on July 13, 2005 at 22:25:13:
I would like to do a 1031 exchange in Florida and Maine but I need to know how long I must keep each property before being able to do this exchange to defer the ordinary income tax at 38%? Does it have to be 6 months or a year? Does each state differ on the length of time?
Re: 1031 exchange - Posted by William L Exeter
Posted by William L Exeter on July 24, 2005 at 11:50:40:
John is right on the money. It all boils down to what your INTENT was. The Treasury Regulations are very clear that you must have the INTENT to HOLD the property for rental, investment or use in a business. You must be able to prove that you had the INTENT to HOLD if you are audited. The best way to demonstrate your intent to hold is to do just that - hold the property. The next question is how long? The Treasury Regulations are silent on this issue. The majority of 1031 exchange experts, including myself, recommend that you hold the properties for at least 12 months or more in order to demonstrate that you had the intent to hold your properties for investment. The reasons that most of us arrive at the 12 month requirement are threefold: (1) Congress almost implemented a 12 month holding period over 10 years ago; (2) 12 months would straddle two tax returns so that you have two tax returns showing rental income, expenses, depreciation, etc.; (3) 12 months is the dividing line between ordinary income tax rates and capital gain tax rates. So, holding for 12 months or more is safe. Holding the property for less than 12 months may or may not qualify depending on your ability to demonstrate that you truly did have the intent to hold the property for investment.
Re: 1031 exchange - time period answer - Posted by Steve
Posted by Steve on July 14, 2005 at 11:45:45:
Posted by JHyre in Ohio on January 04, 2003 at 08:39:22:
In Reply to: 1031 - exchange time period. posted by Steve on January 03, 2003 at 18:13:20:
The IRS and the courts operate on different standards. Assuming that you can prove investment (as opposed to “flip”) intent, the IRS wants to see a holding period of one year +, while the courts are much more lenient…there have been cases where they’ve required mere days of “holding”. If you have the “investment intent”, I’d go ahead with the 1031, understanding that the IRS will contest it if an audit occurs.
John Hyre