1031 Exchange and Vacant Land flipping

[Andrew Wiggins]

Is it possible to utilize a 1031 Exchange for vacant land? Specifically can I use a 1031 to move from parcel to parcel? Also, what is the interaction between owner financed land and a 1031 exchange? Finally, how many 1031 exchanges can I do at the same time? Thanks so much for shortening my learning curve. 

[Dave Foster]

@Andrew Wiggins, Vacant land is eligible for 1031 exchanges as long as your intent is to hold the land for productive use (farming, grazing, building a building to hold, appreciation, waiting in the path of development etc)  If your intent is primarily just to buy it to sell immediately (flipping) then you're a dealer and the land is inventory and you can't 1031 it.  

Land is murky because appreciation over time is a valid intent.  But appreciation absent actual productive use makes it more difficult to demonstrate intent if questioned.

The financing of a property doesn't matter at all.  Whether you pay cash, have a mortgage, or the seller finances you.

There is no restriction on the number of exchanges you do.  It is an issue of your intent and ability to demonstrate intent to hold for productive use.

Not wanting to put words in your mouth - but when your title says flipping, and you want to know how many you can do it really starts to sound like you're developing a model that would not be appropriate for 1031s.  Although there is no statutory holding period most folks feel comfortable with property held more than a year.  There could be circumstances that justify less.  But one accident a year looks much more innocent than 5 or 10 accidents a year.