What's the grey area of 1031 exchange?

Question

I'm new to this forum. New to selling rental property. I have a empty lot that is in my name that I would love to build on after I sell another rental property. I was told because the property is in my name I would still have to pay taxes. What's the best way to reinvest my money and build on property that I already own?

Dave Foster · Answer

@Israel Sheffield, You can't. Sorry :(. You cannot 1031 into improvements on property you already own. A quit claim or sale to another entity so you can then purchase it back would create a step transaction.

If you were to buy a different lot using a reverse construction exchange you could accomplish what you want. Or you could sell both the lot and the other property and exchange into something already built that you liked.

Joey Hamaoui · Answer

Do you want to sell your rental property strictly to bring in the capital to build on your lot? Have you considered doing a cash out refinance on the rental property and using those funds to build?

Israel Sheffield · Answer

thank you. I will keep looking for something else

Israel Sheffield · Answer

thank you. I will keep looking for something else

Israel Sheffield · Answer

Can I deed the property to someone and then buy it back after closing of investment property?

What's the grey area of 1031 exchange?

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