In a 1031 Like-Kind exchange you can exchange any real property for any other real property within the United States or its possessions if said properties are held for productive use in trade or business or for investment purposes. Examples of 1031 like-kind exchange property include apartments, commercial, condos, duplexes, raw land and rental homes*. As used in IRC 1031(a), the words "like-kind" mean similar in nature or character, notwithstanding differences in grade or quality. One kind of class of property may not, under that section, be exchanged for property of a different kind or class. Examples of qualified 1031 like-kind properties and like-kind exchanges:

• apartment building for farm/ranch
• office building for hotel
• raw land for retail space
• unimproved property for commercial property
• airplane for airplane

Examples of non like-kind properties include primary residences, stocks and bonds, notes, partnership interests, developed lots held primarily for sale and property to be resold immediately after initial purchase or completion of improvements.
* Qualification for Section 1031 exchanges depends upon the extent of personal use.

I just read a tremendous Blog by Guy Kawasaki on the Top 10 Ways to use LinkedIn, can my fellow Activerainers help me determine what are the top 10 ways to use AR?

 http://blog.guykawasaki.com/2007/01/ten_ways_to_use.html

I'll start, here are some that come to mind:

Search Profiles for common Education: like "UCLA". Building a nationwide network can often start from a similar experience!

Of course, Search Engine Optimization is paramount here!

 

http://www.humanmetrics.com/cgi-win/JTypes2.asp

 Prior to a few months ago I kept something to myself.  In my daily grind I always assess people's personality types and skill-sets and compare and contrast to others.  I know it seems rather OCD, but when you are as obsessed with reading biographies as I am you start to look for common themes.  I have certainly surmised that those individuals that are fortunate enough to be in a job that is keenly in tune with their personality are the most successful. 

 In the last few months I have started asking people if they ever have taken the test. I usually get one of two responses: (1) Yes, I am _______ and that is so interesting; or, I never have, but I'd love to.

 What other "cocktail talk" do you know that has a win-win result like that?  I urge you to start talking to people about "Who they REALLY are".

 There are many sites out there that will also assess your compatibility with your mate!   Mine is an ISTJ.  She is a Software Developer and our results were hysterical to read out loud.  They were 100% accurate.

 Wikipedia, defines the MB Type Indicator as:

Myers-Briggs Type Indicator (MBTI) is a personality test designed to assist a person in identifying some significant personal preferences. Katharine Cook Briggs and her daughter Isabel Briggs Myers developed the Indicator during World War II, and its criteria follow from Carl Jung's theories in his work Psychological Types.^[1]

The Indicator is frequently used in the areas of pedagogy, group dynamics, employee training, leadership training, marriage counseling, and personal development. However, scientific skeptics and academic psychologists have criticized the indicator in research literature, claiming that it "lacks convincing validity data" ^[2] and could be an example of the Forer effect.^[3][4].

The registered trademark rights in the phrase and its abbreviation have been assigned from the publisher of the test, Consulting Psychologists Press Inc., to the Myers-Briggs Type Indicator Trust.^[5]

This may be a weird topic to be posted by a lawyer.  Most of you think of lawyers as "reactive" and not very proactive in their business development methods. However, I like to cold call.  Yes, sad but true. Several of you cringed reading those two words. 

 Here's the trick: think of how you met your closest work affiliates or clients.  Some are probably from past employment, some are from schmoozing industry events, some are past clients who worked with you along the way, and some (I hope) are people you just met. 

 So what I envision when I dial the phone to call people, I think of about four or five people I have GREAT relationships with in my business that "BUT FOR" cold calling I would have never met. Daniel Odio is a great example.  I consider Daniel one of my most valuable contacts of all time. I consider him a friend and am truly impressed by his work and projects he takes on.  Daniel was a result of calling a Listing for a Property for Sale on craigslist that had "1031 Exchange" in the notes (what I do).  I just called to "introduce myself".

 Therefore I urge you to network and even "Cold call" and keep in your mind the new friends you are going to make.  Start with a simple introduction rather than a sales pitch.

 And once you make a friend, treat them like one: help them out. Roger staubach said, "Life is like an HOV lane, you can get to where you're going a lot faster if you take others with you."

When must the investor decide to complete an exchange?
The decision to exchange must be made prior to closing of the relinquished property. The exchange agreement must be in place and delivered to all parties before the relinquished property transfer of title.

Can the proceeds from the sale of the relinquished property simply be held in escrow at closing?
The proceeds from the sale of the relinquished property should be delivered to a "qualified intermediary". The proceeds cannot be held in escrow, unless the escrow account in question is either a "qualified escrow account" or a "qualified trust account" and not subject to the control of the investor. Any control by the investor is considered to be constructive receipt and is boot.

What is the 45-day Identification Period and when does it begin?
Section 1031 requires that the replacement property be identified within 45 days of closing on the relinquished property. This identification period is strictly enforced and violation will defeat the tax deferral.

What is the 180-day exchange period and when does it begin?
Section 1031 requires the replacement property be purchased within 180 days of closing on the relinquished property OR the date the taxpayer's tax return is due, whichever date is first. The purchase date is considered to be the closing date. Note that for tax return due dates that fall before the 180 days, a tax return extension can be filed. However, a taxpayer can never amend their return for extension purposes.

Is there an extension allowed to either the 45-day period or the 180 period?
The IRS does not allow extensions for either the 45-day period or the 180-day period.

If the exchangor's 45th or 180th day falls on a weekend or holiday do I get the benefit of the following business day?
No. The IRS calculates this timeline based on calendar days. There are no extensions given.

When is a 1031 exchange considered completed?
A 1031 exchange is considered complete once the exchangor has acquired title to all of the identified replacement property(s) to which the exchangor is entitled, within 180 days.

Does vacant land qualify as like-kind property?
Yes, vacant land is like kind with all other types of real property. However, like other properties, in order to qualify for a 1031 Exchange, the land must be held for productive use in a trade or business or for investment.

If the relinquished property is classified as residential income property, does the replacement property need to be residential income property?
No. The like-kind requirement does not limit the type of real property acquired in an exchange. You may exchange residential income property for commercial property, commercial property for industrial property and vacant land for residential income property. Any combination of properties may be exchanged. Again, any property involved in an exchange must be held for productive use in a trade or business or for investment.

What are the requirements for deferring tax on a capital gain?
In order to defer all of the tax on the sale of investment property, first make sure that the relinquished and replacement properties are "like kind" and held for productive use in a trade or business or for investment. Second, make sure that the timelines for the exchange are met. Third, make sure that all of the proceeds generated by the sale of the relinquished property are used in the purchase of the replacement property and that the FMV of the replacement property is equal to or greater than sale price of the relinquished property. If any of the first two requirements listed are not met, no exchange is possible. If any of the third requirement is not met, a taxpayer may be able to partially defer their gain but not wholly.

Am I required to have a mortgage on the replacement property?
No. To avoid mortgage boot on the net debt relief, the replacement property financing should include debt equal to or greater than the debt on the relinquished property. If the investor wishes to reduce their overall debt, they may contribute cash out of pocket to the purchase of the replacement property. Cash contributions by the investor serve to offset net debt relief.