Let’s talk about some sophisticated 1031 exchange arrangements.
One such arrangement is when people want to build improvements on land that they already own.
Let’s say you’re selling a single family home in Faribault, MN but you already own a single vacant lot in Edina, MN. You’d like to take the proceeds from the sale of your Faribault property and construct improvements on land that you already own in Edina. Is that considered a 1031 exchange?
For decades, the IRS took the position that building improvements on land you already own was not an exchange. However, there have been a few favorable Private Letter Rulings in which the intermediary doesn’t construct improvements on the fee title that’s already owned by the taxpayer. Instead, the intermediary constructs the improvements upon a new ground lease. Let’s say the intermediary’s LLC enters into a 99 year ground lease with the fee owner and the intermediary constructs the improvements on top of this new estate that didn’t previously exist. This is a very sophisticated type of 1031 exchange that should only be done with the help of a skilled intermediary.
Find a Qualified Intermediary for Your Next 1031 Exchange
Contact CPEC1031, LLC to find a qualified intermediary for your next 1031 exchange of real estate. Our 1031 exchange professionals have been working on like-kind exchanges throughout the United States for more than two decades. We can put our combined knowledge to work on your next 1031 exchange and make sure you have the greatest possible chance of deferring 100% of your capital gains taxes. Contact us at our Twin Cities office to learn more about the full extent of our services and see how we can help you through the details of your next exchange!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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