We often hear from taxpayers who are eager to buy land in rural Minnesota to hold for investment or business purposes, and use it occasionally for hunting. But is hunting on land intended for 1031 exchange allowed? That’s our topic for this article.
Hunting on 1031 Exchange Land
Hunting land makes the hair on the back of your qualified intermediary’s neck stand up. If you use the land too extensively for your own recreation, arguably you’re not buying it for investment or business purposes. But if you buy land and you really use it for agricultural business, forestry business, or simply to hold for appreciation, that can certainly qualify for 1031 exchange treatment. When you start using the property too much for personal use like hunting, then you might run into a problem from a 1031 exchange perspective.
In a 1031 exchange, I think you can have a primary intent (to hold for investment or business purposes) and an ancillary benefit (using the land to occasionally hunt during a very limited timeframe). It’s just important to make sure that the land is being used for a qualifying purpose for the majority of the time.
Minnesota Qualified Intermediary
At CPEC1031, LLC we offer qualified intermediary services to clients throughout the state of Minnesota and across the United States. For over twenty years, our team has been facilitating 1031 exchanges of real estate. We can help guide you through the process from start to finish and ensure you defer 100% of your gains on the sale of investment real estate. Contact us today to learn more about our like-kind exchange services and see how we can help with your next exchange!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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