1031.Exchange INTELLIGENCE NETWORK
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ELIGIBILITY

Held for investment

Also called: investment intent · investment property use

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PLAIN-ENGLISH DEFINITION

A qualifying purpose under Section 1031: holding real property for investment rather than primarily for personal use or resale to customers.

What it means in practice.

Both the relinquished and replacement real property generally need to be held for investment or productive use in a trade or business. Facts and intent matter.

Why it matters.

Property type alone does not establish eligibility; how and why the taxpayer holds it matters.

Additional notes.

Both the relinquished and replacement real property generally need to be held for investment or productive use in a trade or business. Facts and intent matter.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tipsirs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

EligibilityProductive use in trade or businessAnother qualifying purpose for real property under Section 1031.EligibilityDealer propertyReal property held primarily for sale rather than for investment or productive use; it generally does not qualify for Section 1031.EligibilityVacation home safe harborAn IRS safe harbor addressing when certain dwelling units can be treated as held for investment for Section 1031 purposes.
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