1031 exchange to a lot from a newly constructed SFH

2 Replies

Hello,

We bought a lot in Austin and constructed a SFH (actually an ADU) on it. We are planning to sell the ADU in June and move on to another project (most likely a lot again with or without a house on it). My question is can we do a 1031 exchange for this ? If yes what should I keep in mind to do this transaction in a smooth manner.

TIA

Hi @Nagendran Manidas

It sounds like your business model is a buy, build and sell strategy, which will not qualify for 1031 Exchange treatment.  The property that you buy is actually held for sale (build and sell as inventory).  Properties must be acquired with the intent to hold for rental, investment or business use to qualify for 1031 Exchange treatment.