Capital Gains on vacant land

[TrexandRacy]

What is the name of your state?What is the name of your state? California

Thanks in advance for any advice you can give. We have property (vacant land) that we sold and is in escrow right now. We owned it for almost 3 yrs, and will show capital over $300,000. We own a home that we live in now, for 15 yrs, but are in the process of buying a home that is being built. I believe that the law states that in order to avoid paying capital gains tax I need to re-invest (1031 exchange?) the money into an income property. Is it possible to use those funds to pay off the loan (on the house we want to rent out) and avoid paying the tax on the gains? Or do you have any advice on how to deal with this with out doing something illegal? Thank you!

 

[Snipes5]

The only way to avoid capital gains would be to purchase other investment property of the same character, meaning land for land, rental property for rental property etc.

If the land is already in escrow with no 1031 plan in place, it is probably too late. Seek out the services of a 1031 Facilitator, you can find one by consulting a real estate attorney.

Snipes

 

[jkruler]

the like kind property must be identified in 45 days and the exchange must be completed within 180 days.