Subdivision of Acreage with Residence

[wpharvick]

What is the name of your state? Washington

My personal residence is located on a 5-acre parcel of land. A developer is proposing an 8-lot subdivision of this parcel, one large lot of which would accommodate my existing residence. The developer would finance the development out-of-pocket; I would not relinquish title to my residence. In fact, I would continue to occupy my residence during and after development of the land.

I assume that the land associated with the other 7 lots (that portion of my land to be purchased from me by the developer) would be treated as land held for investment and would thereby qualify for 1031 treatment; is my assumption correct?

Is this a straightforward situation, or do I have to ensure that the "Vacant Land Purchase and Sale Agreement" is properly structured with respect to a 1031 exchange?

Would it make any difference if I were to subdivide the property myself?

Thanks!

 

[abezon]

Get a tax lawyer to help you set up the 1031 exchange. It's too complicated for a lay person to handle on their own. Why not sell your residence too? Then you could exclude the first $250,000 of gain ($500,000 if married filing joint). Is keeping your current home really worth paying the taxes (15%) on all the money you get from the developer?