1031 exchange residential land to investment property

[Chris C.]

I purchased a piece of residential land on 2021-01-27 to build on and eventually be a rental property. I'd like to sell it and purchase a built property and have that be the rental property. I will sell the land for more than I bought it for and I'm not sure if it's even been long enough or if capital gains tax even applies, and if so would I be able to use a 1031 exchange?

[Kory Reynolds]

To expand on what @Michael Plaks stated - yes you most likely can do a 1031, the next question is you should be asking if you should do a 1031.

It isn't free to do a 1031 - you don't want to spend $2k in fees to have a temporary deferral of what would have been $4k of tax.  I have had more than a few situations lately where a client was gung ho about some creative 1031 related transactions (drop and swap, construction exchanges).... until we brought up how much the legal /exchange / related accounting fees could add up to.  Sometimes it is just easier to pay the tax and move on.