1031 Exchange – Why Most Developers Don’t Qualify (and How to Fix It)

Developers love the 1031 Exchange — but the IRS doesn’t love when it’s misused. If you buy, build, and sell frequently, you may be labeled a dealer, not an investor — and dealers can’t use 1031 deferrals.

To Qualify for 1031:

• Hold property for investment (not resale).

• Use separate entities for “build” vs. “hold” activities.

• Keep records showing long-term intent — leases, hold periods, or rental activity.

💡 Key Takeaway: Structure and timing determine eligibility. A clear intent to hold turns a taxable flip into a tax-deferred investment.

⚠️ This blog is for informational purposes only and does not constitute tax, legal, or accounting advice. Please consult your CPA for guidance specific to your situation.