Subdividing Property For Profit Los Angeles CA

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The word “subdivision” often conjures up images of housing developments with tightly-packed homes, but investors can subdivide property for profit in many ways. Subdividing property can be as simple as dividing a large lot in order to sell half of it or as complicated as portioning a 3,000-acre parcel of land into minimum-sized lots for homes.

Many types of property adjustments qualify as subdivisions and need to be approved by city planning departments. Investors will need to seek out county insight on subdivision regulations and requirements if they wish to divide a single property into multiple lots, combine one or more properties into a single lot or adjust an existing property line. Investors intending to sell subdivided land should also be aware of potential capital gains taxes. Even if an investor has lived on a property for the requisite two of the last five years, if he or she subdivides the property, the new lot will no longer qualify as a primary residence. If this investor were then to sell the half of the lot on which he or she did not live, the sale could be subject to capital gains that might not otherwise have come into play. One possible way to avoid these taxes is through a 1031 exchange.

The subdivision process varies from county to county. The examples in this article are from specific counties and can offer a general overview of the application process, but investors should refer to their local planning department for more specific information.