1031 Exchange: Land for Land? - Posted by Tony S. in FL

Posted by William L Exeter on July 21, 2003 at 23:44:44:

The basic requirement is that the relinquished and replacement properties be held for investment, income production (rental) or use in a business. If you have held the vacant land as investment property, then it has certainly met the qualified use test, and real property is like kind as to other real property, including vacant land for vacant land. It appears in your comments that you have have held the relinquished property as rental property, so it has met the qualified use test. You can certainly sell off a portion of the property in a 1031 exchange and acquire vacant land else where as your replacement property. I’m not sure what you mean by build a home on. You must have the INTENT to hold the property for a qualified use. If you intend to hold the lot as an investment, to build a home and rent it out, those will both work. But, if you intend to build a home on the lot to live in you have converted your replacement property into something other than a qualified use and it would therefore be disallowed as a 1031 exchange. Assuming that you have the INTENT to continue to use the property under the qualified use quidelines, you can certainly structure the 1031 exchange as a build-to-suit 1031 exchange so that you can acquire the vacant lot and construct improvements on it. This get much more involved, so if you need more information on build-to-suit 1031 exchange transactions, email me.

Bill Exeter
Diversified Exchange Corporation.

1031 Exchange: Land for Land? - Posted by Tony S. in FL

Posted by Tony S. in FL on July 18, 2003 at 22:25:38:

In reading about 1031 exchanges, I generally find them used for investment properties.

I was wondering if you can use an exchange for other types of properties, particularly residential lots.

I have a rental house on 2 acres near a downtown area of a small town in another state. The house sits in a corner of the lot. The 2 acres could easily be divided into thirds and the vacant portions sold.

I was wondering if I could exchange one of the lots for a lot here in Florida that I could build a home on.

If so, would the exchange cover just the price of the lot here or could it include necessary improvements to make the lot buildable (fill dirt)?

Tony in FL