Question of the Month Fixed Up Exchange Property

So you have a property you fixed up about a year ago and are asking if you can do an 1031 exchange on it now. There is no clear answer to this question. The answer really has to do with your intent with the property. In order for it to qualify for an exchange, you must have held the property for investment purposes. Flipper properties do not qualify as investment properties. To determine whether your property may qualify, it is important to examine how long you owned the property before fixing it up, what your intention was when you first acquired the property, whether anyone has lived in the property during this time and what your intention is with the property you wish to buy with the proceeds.

Depending upon your answers to those questions, you may or may not qualify for an exchange. If the answers indicate you held the property for resale, the exchange would not be possible. If, on the other hand, you and your tax counsel can show intent to hold as investment, the exchange is a logical next step.

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Still have questions about exchange property qualifications? Give our experts a call at 800-735-1031.