Key Takeaways
- Eight essential documents must be in the exchange file—missing any creates audit vulnerability.
- Revenue Procedure 2008-16 safe harbor: 24+ months ownership, 14+ days rental, limited personal use per 12-month period.
- Related party exchanges require a 2-year holding period—early disposition by either party disqualifies the exchange.
- Form 8824 must be filed with the tax return for the year the relinquished property was sold.
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Test Your Knowledge
1.What is the minimum recommended holding period for properties involved in a 1031 exchange to demonstrate investment intent?
2.What are the related-party rules in a 1031 exchange?
3.What documentation must be maintained to prove a property was held for investment purposes?