Posted by dealmaker on March 22, 2006 at 17:34:12:
OK, it’s not an “exchange” in that you have to find someone who wants to swap what they own for what you own. It’s a paperwork transaction using language that you putinto the sales agreement and the later purchase agreement.
The more important question is “was the land income producing?” I think that’s the criteria but you might want to do a google search of “1031”, you’ll get about a million or so hits. Many of them will have a list of FAQs that may answer all your questions.
The only reason to do this is to (temporarily) avoid payment of taxes on the gain. Is there sufficient gain to warrant this? It should cost you about $500 or so to do the deal, and you MUST put the proceeds into other income producting ppty.