When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
"Stuart O. Bronstein" <spamtrap@lexregia.com> wrote:
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
I believe if you did NOT make the election to treat the property
as a new acquisition under 1.168(l)-(6)(l) the holding period
tacks along with the basis.
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
A client has done a 1031 exchange, and then wants to sell the new
property within one year from the date of the exchange. My thought is
that he should still qualify for long term capital gain treatment, but
I haven't been able to find verification.
Can anyone help clarify this for me?
Thanks.
--I think that the IRS will take the position that this is a "fix and flip" transaction and disallow the 1031 exchange. I.e., the short holding period shows no intention to hold the property for investment or use it in a trade or business.
Stu
http://DownToEarthLawyer.com
--
Stuart O. Bronstein wrote:
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
A client has done a 1031 exchange, and then wants to sell the new
property within one year from the date of the exchange. My
thought is that he should still qualify for long term capital
gain treatment, but I haven't been able to find verification.
Can anyone help clarify this for me?
I think that the IRS will take the position that this is a "fix
and flip" transaction and disallow the 1031 exchange. I.e., the
short holding period shows no intention to hold the property for
investment or use it in a trade or business.
Alan <tempuser@vacationmail.com> wrote:
Stuart O. Bronstein wrote:
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
A client has done a 1031 exchange, and then wants to sell the new
property within one year from the date of the exchange. My
thought is that he should still qualify for long term capital
gain treatment, but I haven't been able to find verification.
Can anyone help clarify this for me?
I think that the IRS will take the position that this is a "fix
and flip" transaction and disallow the 1031 exchange. I.e., the
short holding period shows no intention to hold the property for
investment or use it in a trade or business.
Thanks Alan - excellent point.
Stuart O. Bronstein wrote:
Alan <tempuser@vacationmail.com> wrote:
Stuart O. Bronstein wrote:
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
A client has done a 1031 exchange, and then wants to sell the
new property within one year from the date of the exchange. My
thought is that he should still qualify for long term capital
gain treatment, but I haven't been able to find verification.
Can anyone help clarify this for me?
I think that the IRS will take the position that this is a "fix
and flip" transaction and disallow the 1031 exchange. I.e., the
short holding period shows no intention to hold the property for
investment or use it in a trade or business.
Thanks Alan - excellent point
Surely there must be more to this analysis. A short time period
alone is not the whole story.
Taxed and Spent <nospamplease@nonospam.com> wrote:
Stuart O. Bronstein wrote:
Alan <tempuser@vacationmail.com> wrote:
Stuart O. Bronstein wrote:
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
A client has done a 1031 exchange, and then wants to sell the
new property within one year from the date of the exchange. My
thought is that he should still qualify for long term capital
gain treatment, but I haven't been able to find verification.
Can anyone help clarify this for me?
I think that the IRS will take the position that this is a "fix
and flip" transaction and disallow the 1031 exchange. I.e., the
short holding period shows no intention to hold the property for
investment or use it in a trade or business.
Thanks Alan - excellent point
Surely there must be more to this analysis. A short time period
alone is not the whole story.
It's not the whole story, but it's close. For a 1031 exchange you
have to exchange investment property for investment property. If you
sell newly acquired property too quickly, the IRS conclusion is that
it was to sell, not for long term investment.
On 9/5/2023 5:34 PM, Stuart O. Bronstein wrote:See "https://www.firstexchange.com/holding-period-requirement-1031-exchange" for more info on this issue of holding period.
Taxed and Spent <nospam...@nonospam.com> wrote:
Stuart O. Bronstein wrote:
Alan <temp...@vacationmail.com> wrote:
Stuart O. Bronstein wrote:
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
A client has done a 1031 exchange, and then wants to sell the
new property within one year from the date of the exchange. My
thought is that he should still qualify for long term capital
gain treatment, but I haven't been able to find verification.
Can anyone help clarify this for me?
I think that the IRS will take the position that this is a "fix
and flip" transaction and disallow the 1031 exchange. I.e., the
short holding period shows no intention to hold the property for
investment or use it in a trade or business.
Thanks Alan - excellent point
Surely there must be more to this analysis. A short time period
alone is not the whole story.
It's not the whole story, but it's close. For a 1031 exchange you
have to exchange investment property for investment property. If you
sell newly acquired property too quickly, the IRS conclusion is that
it was to sell, not for long term investment.
I disagree. Just because you relinquish property #2 "too soon" is not
the entire test. It may raise the IRS eyebrows, but they have to look
at the entire picture. You can very well hold property for a short time
and still have its purpose be investment. And I think your use of the
term "long term investment" is rather gratuitous here, perhaps just a
slip of the tongue.
--
On Tuesday, September 5, 2023 at 8:39:01 PM UTC-7, Taxed and Spent wrote:
On 9/5/2023 5:34 PM, Stuart O. Bronstein wrote:See "https://www.firstexchange.com/holding-period-requirement-1031-exchange" for more info on this issue of holding period.
Taxed and Spent <nospam...@nonospam.com> wrote:I disagree. Just because you relinquish property #2 "too soon" is not
Stuart O. Bronstein wrote:
Alan <temp...@vacationmail.com> wrote:
Stuart O. Bronstein wrote:
When doing a 1031 exchange, the basis of the original property
transfers to the new property. But does the holding period also
transfer over?
A client has done a 1031 exchange, and then wants to sell the
new property within one year from the date of the exchange. My
thought is that he should still qualify for long term capital
gain treatment, but I haven't been able to find verification.
Can anyone help clarify this for me?
I think that the IRS will take the position that this is a "fix
and flip" transaction and disallow the 1031 exchange. I.e., the
short holding period shows no intention to hold the property for
investment or use it in a trade or business.
Thanks Alan - excellent point
Surely there must be more to this analysis. A short time period
alone is not the whole story.
It's not the whole story, but it's close. For a 1031 exchange you
have to exchange investment property for investment property. If you
sell newly acquired property too quickly, the IRS conclusion is that
it was to sell, not for long term investment.
the entire test. It may raise the IRS eyebrows, but they have to look
at the entire picture. You can very well hold property for a short time
and still have its purpose be investment. And I think your use of the
term "long term investment" is rather gratuitous here, perhaps just a
slip of the tongue.
--
| Sysop: | Keyop |
|---|---|
| Location: | Huddersfield, West Yorkshire, UK |
| Users: | 300 |
| Nodes: | 16 (2 / 14) |
| Uptime: | 46:49:19 |
| Calls: | 6,710 |
| Calls today: | 3 |
| Files: | 12,243 |
| Messages: | 5,354,357 |
| Posted today: | 1 |