1031 Exchange after land purchase?

[Brendan H.]

If I buy land today, but wait one year to pay a

builder to build a rental property on the land, am I able to 1031X anything into the new build at that point (one year from now?).

Example:

- Buy land Oct, 2022.

- Sell Rental Property (A) September, 2023.

- Pay Builder and/or close on construction loan to build new Rental Property (B) September, 2023. This new rental is built on land that was purchased 1 year ago.

- Can I 1031X the Property (A) into Property (B)?

Thank you!

[Dave Foster]

@Brendan H., If that LLC is a multi-member LLC. And you don't control more than 50% of the LLC then it might work. Because the LLC would not be considered a related party to you. But even then leasing it to you and then buying it from them completed sounds an awful lot like a safe harbor reverse exchange but done without a qualified intermediary. The IRS would look pretty closely at it.

If your LLC is a single member disregarded entity then it is just like you buying from you. And that wouldn't work.