Tualatin Industrial Property Case Study

The Challenge

A 27 acre industrial site in Tualatin, Oregon being sold under a two year contract to purchase agreement with the seller desiring to exchange under IRC Section 1031 tax deferral. Under the contract purchase, closing would normally disqualify any subsequent payments from 1031. Additionally, the seller wanted to retain about two acres.

The Strategy

The buyer was buying under two separate sales of properties he owned.

Since the seller had five different tax lots, the lot lines were adjusted to accommodate the acreage of the properties to be conveyed.

The Results

By adjusting the lot lines the seller was able to sell the appropriate acreage in two separate transactions, allowing each to be eligible for 1031. Since the second transaction was to occur about a year after the first and under the contract scenario was to bear an interest rate, the buyer and seller agreed to increase the purchase price to include the interest amount. Furthermore, by adjusting the lot lines the seller was able to retain exactly two acres.