Refuting the Notion of a General Holding Period Requirement for Section 1031

The Practical Real Estate Lawyer, Vol. 39, pg. 21, 2023

Brooklyn Law School, Legal Studies Paper No. 751

14 Pages Posted: 20 Oct 2023

Date Written: October 19, 2023

Abstract

This article revisits the widely misunderstood issue of whether section 1031 imposes a holding period requirement on property received in a section 1031 exchange or property transferred as part of a section 1031 exchange. The article presents a hypothetical discussion between a property owner and tax advisor to show that the section 1031 qualified-use requirement does not impose a holding period requirement. Suggestions by tax advisors to the contrary appear to be based solely on perceptions of the likelihood of audit or the issue being raised on audit, which factors are prohibited in giving tax advice. Thus, the article recommends that tax advisors carefully consider existing law when providing advice to property owners who are considering transactions proximate to section 1031 exchanges.

Keywords: section 1031, tenancy-in-common, drop-and-swap, qualified-use requirement, investment purpose, held for productive use in a trade or business

Suggested Citation

Borden, Bradley T., Refuting the Notion of a General Holding Period Requirement for Section 1031 (October 19, 2023). The Practical Real Estate Lawyer, Vol. 39, pg. 21, 2023, Brooklyn Law School, Legal Studies Paper No. 751, Available at SSRN: https://ssrn.com/abstract=4607305

Bradley T. Borden (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

HOME PAGE: http://www.brooklaw.edu

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