Discussion:Selling Land
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Basic Tax Questions --> Selling Land
Discussion Forum Index --> Tax Questions --> Selling Land
| 18 November 2007 | |
| I have a client who is selling land. It is commercial land bought to build a business that they never went through with. They bought it personally. It is in their name personally. They are now going to sell it for double the cost. I am assuming the profit will all be taxable. Can they avoid that by reinvesting it? What would like-kind be considered. Would it have to be land. They want to purshase a condo for a second home or vacation rental. How long would they have to reinvest. | |
| 18 November 2007 | |
| Reg. 1.1031(a)-1(b). If your client outright sells it then it is a sale and precludes a 1031 exchange. However, if the sale is accomplished via a qualified intermediary, Reg. 1.1031(k)-1 then it would work. A second home would not qualify but the rental would - investment property exchange. | |
| 19 November 2007 | |
| My point about it being bought personally, is that they really didn't buy it as investment property. They were going to use it but decided not to. I did not think that it would be a 1031. How would it differ if it were residential? If you sell your main home you can defer the gain. If you sell your second home you cannot defer. I was thinking this would be treated the same as a second home. Another way to look at if would be if you bought a lot in a subdivision to build on but then sold it instead. ??? | |
| 19 November 2007 | |
| It seems that in your first post you were looking for a way to do a 1031 and in your second post you seem to look for a way not to do it. If your client wants to defer gain, point him/her to a QI. | |
| 19 November 2007 | |
| This property does sound like it qualifies for a 1031...if the owners want to do that. The regulations provide quite a bit of room in defining "similar property", but you need a QI. | |
| 21 November 2007 | |
| "If you sell your main home you can defer the gain." Huh? You can no longer defer gain on the sale of your main home. This rule changed awhile ago.
You also state that they did not really buy it for investment property but in your original post you said that they bought it to build a business on. You can do a 1031 on business property so it sounds like, as others have said, you should talk to a QI. | |
To join in on this discussion, you must first
log in.
