Co owner of lot in land trust can build and do 1031 exchange?

[Chris Buckely]

I am a part owner of a lot that is in a land trust. It is owned free and clear. I am selling a rental property and would like to roll the gains into a new property but like most not finding anything. Is there a way to build a new rental on the land, and 1031 into the new build?

[Dave Foster]

@Chris Buckely, Nope.  Once you own a property you cannot exchange into improvements on property you already own.  There may be a way to unravel the trust if there are a large number of members.  But you've got to have a savvy aggressive accountant to make that work.

You'd be better served to sell the lot and the other property close together and combine them to buy a completed house on property.