1031 Exchange for vacant land?

Question

My mother has a 470 acre property of pasture land and foothills.  She is considering sell and worried about capital gains.  She is under the impression that the only way she could avoid capital gains is to buy a similar property?  As in she can not buy rental property, houses or apartments on a 1031 exchange.  She would have to buy another pasture/farmland type property?  Can anyone help clarify this for me?  Thanks

John Kernen · Answer

@Dave Foster thank you!  I sent you an email!  Look forward to hearing your thoughts!

Dave Foster · Answer

Thanks for the shout out @Frank Chin.  Your mom has a ton of options @John Kernen.  The 1031 exchange has a component to it referred to as like kind (often called a like kind exchange).  But that refers to the use of the property and not the type of property.  Any type of real estate that has been held for investment use (not your primary residence) can be sold and, with a 1031 exchange you can purchase any other type of real estate also to be used for investment.

So if it perfectly fine to sell land and by residential investment properties.  or commercial or industrial, single/multi family.  As long as they are for investment use.

You're mom's in great shape to sell that land (pasture land generally isn't the greatest cash flow is it :). and purchase other types of investment properties that will provide her a much better cash flow for living.

Frank Chin · Answer

The short answer is yes, and there's a recent discussion of it where @Dave Foster outlined the details. See: 1031 Vacant land

Dave Foster · Answer

Congrats on that contract @John Kernen.  Hopefully that will encourage others out there that life and business are moving on (even in these weird times).

I just sent a pm to you so we can connect outside the forum.

John Kernen · Answer

@Dave Foster,  thank you for the reply!   She just recieved an offer on the property today so we need to get a plan in place!  Would we be able to reach out to you with some more questions? Thanks again!

1031 Exchange for vacant land?

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