admin / January 25, 2019
One can trade into newly constructed property, but one cannot own the land on which the improvements are being built. The land must be owned by either the seller, the developer or a parking intermediary. If the taxpayer already owns the land, it can be sold to a parking intermediary or the developer. The seller or intermediary will contract to construct the improvements, and at the end of the 180-day period can convey the property (completed or partially completed) to the taxpayer to close out the exchange. This is usually a race against the clock to try to spend as many construction dollars as is necessary to complete the trade. One cannot prepay construction costs.
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