What is Eminent Domain?
"Eminent Domain," often called "condemnation," is the legal process by which a public body is given the legal power to acquire private property for a use that has been declared "public" by constitution, statute or ordinance.
Often, the government invokes eminent domain for public works projects such as road widening, highway construction, or installation of new electrical or plumbing lines. The power of eminent domain can also be used for the construction of new schools, libraries, police stations, or other public-service properties.
Not only must the government show that taking your property under eminent domain is for "public use," it also must show that the taking is "necessary."
For example, if the installation of new power lines requires 100 feet of your property, then the government doesn't need to take 200 feet. Eminent domain can be used to take all or only part of a property but the government must show that whatever land is taken is necessary for public use.
The courts have allowed for a rather broad definition of "public use," including the taking of private property for redevelopment. In some cases, property has been taken to allow for the construction of private commercial development as a means of increasing the community's tax base.
As a result of rulings like these, many states have passed legislation curbing the use of eminent domain and narrowing the definition of "public use."
What Comprises "Public Use"?
Fortunately, if an investor facing forced conversion follows the guidelines outlined in Section 1033 of the Internal Revenue Code, they can complete a successful 1033 Exchange and defer all of their capital gains taxes.
At Exclusive Financial Resources, we know your attorney has fought hard to get you the most value for your property. We are here to help you in the next step in that process. Request a copy of our White Paper here or schedule your 15-minute discussion today, and find out what your next step is