Just sold a parcel we owned- raw land. Made a 20k profit. Can you do a 1031 exchange on this or does it have to be a house? I feel like I should know this but I don't. Thanks!

@Laura Krukowski, Any type of investment real estate can be exchanged for any other type of investment real estate. So yes, land held with an investment intent can be exchanged for any other type of investment real estate - commercial residential, etc. Remember, like @Bill Brandt said, that the QI for your 1031 exchange has to be in place before you close the sale of your old property. You can be under contract. But you can't close without the 1031 being in place with your intermediary. the bright side is that the tax on $20K won't be too large of a tax bill (although NY will stick it to you state wise) if you've already sold. And by the time you factor in the savings by not doing a 1031 you're not going to be too bad off at all.

Hello Laura! Any property held for productive use in a trade or business or for investment CAN be exchanged for like-kind property. Like-kind refers to the nature of the investment rather than the form. Any type of investment property can be exchanged for another type of investment property. A single-family residence can be exchanged for a duplex, raw land for a shopping center, or an office for apartments. Any combination will work. The exchanger has the flexibility to change investment strategies to fulfill their needs.

Yes. But keep in mind the fee for an exchange is about $1k and your tax liability on 20k is probably only 2.5-4k if not offset by other stuff, so I wouldn’t tie yourself in knots trying to make it happen if it isn’t just sitting there.

Ps. You can’t do it after you sell. You can never have control over the money.

@Laura Krukowski I sent you an email. But will reply here as well. This is called a partial exchange and it's perfectly fine. There is a video on my youtube channel as well that explains more fully. I can't post that link but youtube googling my company name will get you to the channel. And if you find it please like and subscribe ( I've wanted to say that phrase all my boomer life :)

We did not retain any oil, gas or mineral rights. This area of NY has heavy environmental protections and there would not be any cash flow on it-the parcel was not big enough for that anyway.

Excellent thank you for that thorough explanation!

Does 1031 exchange work on raw land?Does 1031 exchange work on raw land?

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