How long must a property be rented to qualify for a 1031 exchange?
Christopher Davis
Updated on March 11, 2026
14 days
Moving into a 1031 Swap Residence You must rent the dwelling unit to another person for a fair rental for 14 days or more. Your own personal use of the dwelling unit cannot exceed the greater of 14 days or 10% of the number of days during the 12-month period that the dwelling unit is rented at a fair rental.
What property qualifies for 1031 treatment What are some examples?
Qualified “Like-Kind” Property
- Raw land or farmland for improved real estate.
- Oil & gas royalties for a ranch.
- Fee simple interest in real estate for a 30-year leasehold or a Tenant-in-Common interest in real estate.
- Residential, Commercial, Industrial or Retail rental properties for any other real estate.
How does a 1031 exchange work with rental properties?
The intermediary holds the funds after one property is sold in the 1031 exchange and uses that money to buy the new replacement property. When doing a 1031 exchange, the owner must identify the property he is exchanging and declare it before the sale.
When do you have to pay taxes on a 1031 exchange?
The new property must be purchased within 180 days of the closing date of the original property sale. In order to defer 100% of taxes, the property sold must be equal to or greater than the property being purchased; otherwise 1031 exchangers must pay taxes on the difference in value.
When to use 1031 exchange to defer capital gains?
This §1031 exchange allows you to defer capital gains taxes until the newly acquired (replacement) property is sold. Then, if that replacement property is converted (after two years) into your principal residence, you may escape some capital gains taxes permanently! It’s a win/win!
Can you sell a primary home to purchase a 1031 exchange?
3. Investment Rule It is not permissible to sell a primary residence to purchase an investment property through the 1031 rule. Likewise, you cannot sell an investment property to purchase a primary home with this rule. 4. Debt & Equity in the 1031 Exchange
