Can Vacant lot be Sold as a 1031?

[Achi Adamit]

My partners and I are in contract to sell a small vacant lot in Philadelphia for $35,000, which we bought a year and a half ago for $20,000.  

I know its not a lot of money, but I was hoping I'd do a 1031, but I was told that in order to be qualified for a 1031 the property should have been "for investment purposes" which usually means for rental, which it was not.

Can someone clarify here?  Keep in mind this is in Philadelphia PA.

Thank you!

[Dave Foster]

@Achi Adamit, if you had the intent to hold that lot while deciding how to ultimately handle it and didn't do something like have it listed for sale the entire time you should be able to do a 1031.  Income production is not a requirement to be eligible for 1031.

Where you'll have issues is that Pennsylvania does not recognize the 1031 exchange for deferral of state taxes.  You'll be able to defer federal however and that would create a net benefit as long as the 1031 didn't cost you an arm and a leg (figure 750 for one).  Whether or not that is worth it to you is strictly your preference.