Subdividing Property sell lots or keep and build duplexes

[Deanna Hubert]

Should i try to sell the property prior to putting the infrastructure in or pay to have the infrastructure put in, then hire a contractor to build the duplexes to either sell or keep for rental income?

[Jay Hinrichs]

I would suggest you talk to your tax advisor /  accountant..  if you create inventory you may be deemed a dealer.

if you build them out and hold them.. then of course as long as your intent is to hold and you hold more than a year then you can depreciate them and 1031 exit at some point.

if you create lots ( and again depending on your situation ) and sell individual lots you could be deemed a dealer

If you sell it prior to subdividing you probably preserve your 1031 rights or long term cap gain.