"If I own two properties: one building and one bare land, can I sell my building as my Old Property and build a new structure on my bare land as my New Replacement Property?"

The IRS recently issued a private letter ruling allowing a taxpayer to use exchange funds from the sale of one property to build on another of its properties. Now, the IRS has issued a second ruling, similar to the first, that allowed a different taxpayer to do exactly the same thing. With two back-to-back rulings allowing this, we now have a clear road map for our clients who want to sell one of their properties in a 1031 exchange and use the proceeds to build on another property they are already in title to.

--The Experts

Related articles:

IRS Issues ANOTHER Ruling on Using Exchange Funds to Build on Property You Already Own, by Gary Gorman in 1031 Solutions, 10.03

Using 1031 Funds to Build on Property You Already Own, by Gary Gorman in the Colorado Real Estate Journal, 09.02.03

TEE-Shots are Tips from the Exchange Experts that are designed to make you think about, and ask questions about, the 1031 exchange process.