What is Qualified Use in 1031 Exchanges

Your relinquished property must have been held by you for rental, investment or use in your business. And, you must have the INTENT to HOLD your acquired like-kind replacement properties for rental, investment or use in your business.

Property not held for rental, investment or use in your business will not be considered to be qualified use property and will generally not qualify for 1031 exchange treatment.

For example, property acquired by you with the INTENT to fix-up and then sell ("flipping") will actually be classified as property HELD for SALE rather than held for rental, investment or use in your business, and will therefore generally not qualify for 1031 exchange treatment.

Apartments acquired for the sole purpose of converting into condominiums and then being sold is actually real property held for sale and not held for rental, investment or use in your business, and will generally not qualify for 1031 exchange treatment either.

For more complete information on 1031 exchange relinquished and replacement property holding requirements, please refer to our article titled "Holding Guidelines for 1031 Exchange Properties" that can be found in the Exeter 1031 Exchange Resource Library on our website at www.exeter1031.com.