1031 rental properties into farm land

[Matt Streeter]

We currently own two nice duplexes,  they have been totally redone and are set to make money. we never intended to sell them,  so have accumulated a lot of write offs against them since we started in 2019. this year was actually our first profitable year. A rare opportunity has presented itself, to buy extremely valuable land at a reasonable price per acre.  the land is currently wooded (60%) and fenced in farmland (40%) the fenced in farmland currently has beef cows on it. we are cash poor, as all of our equity is tied up in assets or investments such as the rental properties, our single family home,  401k, etc. So to aquire the property we will most likely have to sell our investment properties.  we would like to roll them over into the land,  but a couple questions follow with if that scenario alone qualifies- would we be able to ever 

1) subdivide and sell a lot to help recoup our money

(the price per acre is reasonable because it is such a big lot- if we were to sell off one small couple acre lot we could recoup an extreme amount of money)

2) subdivide and build a primary residence on a portion of the acreage

both instances leave the property's primary uses agricultural, whether it be for raising beef cows,  logging the wooded acreage, leasing tillable acreage to farmers etc.

please point me in the right direction! thank you

[Matt Streeter]

Quote from @Dave Foster:

@Matt Streeter, You can certainly 1031 those duplexes and purchase the land while deferring tax on the gain.  

You can sell any part of that land any time you want.  You will simply pay the tax on the part of the gain that was allocated to the parcel you sell plus any new gain.

You can subdivide and build on that property immediately.  For a primary residence you would want to do one of two things.

Either - Build and use the new build for investment for a year or two.  Or don't build for two years while using the land for it's investment purpose.  But if the land was more expensive than the sale of the two duplexes you may be able to make a case to build and move in immediately.

Thank you for the insight! the property itself is 150 acres for around 450,000$. if we were able to 1031 the rental properties if we sold at the absolute maximum they're worth,  that would be about 250,000 each. after paying off the loan balances that would leave us with around 300,000 to roll into the acreage.