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  1. #1
    Join Date
    Oct 2015
    Posts
    15

    Default 1031 Like-Kind Exchanges Involving Building on Land I Already Own

    I am considering selling some real-estate and investing in more expensive real-estate. My situation seems to conform with all the rules I've read but the rules I've seen are silent on one key issue that I fear might prevent compliance. I want to transfer the funds to build a rental property on land I already own. Assuming the cost of the building (not including the value or cost o the land) exceeds the proceeds from sold real-estate, can I do a like-kind exchange and if so, are there any special precautions or steps I must take?

  2. #2
    Join Date
    Oct 2006
    Posts
    15,280

    Default Re: 1031 Like-Kind Exchanges Involving Building on Land I Already Own

    Quote Quoting edtarboosh
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    I am considering selling some real-estate and investing in more expensive real-estate. My situation seems to conform with all the rules I've read but the rules I've seen are silent on one key issue that I fear might prevent compliance. I want to transfer the funds to build a rental property on land I already own. Assuming the cost of the building (not including the value or cost o the land) exceeds the proceeds from sold real-estate, can I do a like-kind exchange and if so, are there any special precautions or steps I must take?
    A like kind exchange has to be done through an intermediary. From a practical standpoint I am not sure how that could be done in the scenario that you describe. I believe that your best bet would be to talk to a 1031 exchange company about your scenario. They are going to best know if its a viable idea.

  3. #3
    Join Date
    Sep 2010
    Posts
    19,000

    Default Re: 1031 Like-Kind Exchanges Involving Building on Land I Already Own

    What you're describing is a 1031 improvement exchange. In addition to what LL says about the intermediary (and there are indeed those who specialize in doing this you should talk to), you have a very limited time (180 days) to perform the actual building involved.

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