1031 exchange:
Subdividing question
Dear Steve:
I'm selling a condo in D___ Jan 15 and I want to buy 3 subdivision lots in C___ to hold for two or three years and then sell them and turn them over to more subdivision lots to hold another two or three years. Is this the right situation to use the 1031 process or will I get caught up in paying the deferred capital gains when I sell the subdivision lots?
Dear B:
Subdividing real property is not an investment activity it is a business activity. However, If you buy lots that are already subdivided, hold them for investment and then resell them, that is an investment activity. In order to qualify for a 1031x both old and new properties must be held for investment. Therefore, the example which you propose seems to qualify for 1031x treatment. I hope you will chose us for your 1031x.
Sincerely,
Steven W. Hickox,
attorney, President 1031x.com.
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