The IRS has issued Revenue Procedure No. 2008-16, “Safe Harbor for Like-Kind Exchange of Dwelling Unit”. It is effective for dwelling unit exchanges occurring on or after March 10, 2008.
http://www.irs.gov/irb/2008-10_IRB/ar12.html#d0e2682
In this revenue procedure, the IRS defines a 24 month period of qualifying use for both the relinquished property and for the replacement property in an exchange.
It would appear that from this date forward that serial exchanges can only be accomplished at 24 month intervals. A relinquished property must be held for investment use for at least 24 months before it is eligible to participate in a 1031 exchange, AND, the replacement property must be held for investment use at least 24 months to establish the exchange.
The concensus opinion that a 12 month holding period for a dwelling unit was sufficient to establish an exchange is no longer valid. It now seems that a property acquired in a 1031 exchange must be held for investment use at least 24 months before it can be converted to a primary residence, or, participate in another 1031 exchange.
Does anyone have a different interpretation?