If you’ve held on to your land for a long time, that land has risen significantly in value, causing major tax implications when its sold. However, you can defer the taxes on the gain by entering into a 1031 exchange. In order to qualify for a 1031 exchange, both the property transferred and the property received must be held either for productive use in a trade or business or for investment and the property transferred and received must be like-kind property. You have 45 days after you close the sale of your property to identify the property you are going to purchase, and 180 days to close the purchase. In addition, a qualified intermediary must be used to facilitate the exchange. While 1031 exchanges are common, there are many ways to violate the rules so it is important that you speak to a title company, attorney, and certified public accountant to ensure the taxes are properly deferred.
Disclaimer: This is not legal or tax advice. Please consult your attorney and CPA for any legal or tax matter.