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1031 Exchanges Work For Land As Well

By
Real Estate Agent with RE/MAX Bryan-College Station TREC# 499368

Real estate prices are appreciating moderately currently in Texas.  We never have, and probably never will, see the double digit gains that other states saw recently, but this makes us much less likely to have a price correction in our near future! 

One of our high growth specialties currently is land.  In land prices we have seen double digit gains for the past five years, adding up to a robust 76% gain total.  Only 1973-74 had larger percentage point increases per year.

The median land price in 2005 was $1,483, up from $1,274 per acre in 2004.  Now, before you ask....No, you can't come here and get one acre for $1,483.  This typically applies to a large "ranch style" estates, fairly distant from the city with 50 or more acres.  Individual one to five acre tracts are still selling for 10K-50K per acre. 

Much of this land is being bought for recreational property rather than agricultural use (due to drought and farm policy disarray) and the demand is quite high. 

When delving into your 45 day identification period for your 1031 Exchanges, realise that land is an option and think about investing.  Current predictions look fairly rosy for the future.

Posted by

Chris Tesch

RE/MAX Bryan-College Station

Bill Exeter
Exeter 1031 Exchange Services, LLC - San Diego, CA
1031 Tax-Deferred Exchange Expert

Great post.  

Most investors and even Realtors do not realize that 1031 exchanges in and out of vacant (raw) land absolutely qualify for tax-deferred exchange treatment. 

However, if you are exchanging out of improved property and into vacant (unimproved) property, the 1031 exchange will defer your capital gain taxes but will not defer your depreciation recapture taxes.  Your depreciation recapture taxes will be due in the year in which the sale of the relinquished property closed. 

Nov 26, 2007 12:16 PM