Buying property from relative

[Jonathan Burton]

I am currently partners in a corporation of which I own 30%. This corporation owns a gas station. We are planning on selling this gas station and doing a 1031 exchange. The corporation is interested in buying a piece of property that I currently own personally. They would like to develop that piece of property. Will that be possible since I own less than 50% of the company? or can they not buy it since I am in the corporation. Thanks greatly for any advice.

[Dave Foster]

@Jonathan Burton, There's a bunch of moving parts you'll need to flesh out but here's some quick bullets to start your thought process.

- Because you own no more than 50% of the gas station corporation you would not be considered a related party. The corporation could sell the gas station and purchase your land in theory.

- However, only the land/building portion of the gas station would be eligible for a 1031 exchange into your land.  it is real estate for real estate and much more specific FFE for FFE.

-It is the corporation that will be doing the exchange.

-if the corporations intent is to develop and sell (as in lots) then that would not be a valid exchange.  They'll be better off paying the capital gain on the sale of the station and that would limit the ordinary income gain from the development of the other piece.  However, if their intent is to develop and hold that piece of property that would be a valid exchange.

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