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iowa exchanges: Humor - Neologisms - 02/14/08 04:06 PM
Although there is little doubt that my typical blog posting is full of humor from start to finish… I’ve never written a blog that was designed at the outset to be humorous. Okay, so that first part is a stretch...
At any rate, the Washington Post apparently periodically asks its readers to submit neologisms, which was a new word to me when I ran across it. According to dictionary.com, the definition of neologism is as follows:
a new word, meaning, usage, or phrase.the introduction or use of new words or new senses of existing words.a new doctrine, esp. a new interpretation of … (7 comments)
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iowa exchanges: Would You Like Some Good News? Success Regarding Like-Kind Status in the Farm Bill - 01/25/08 10:37 AM
Would you like some good news? There has been success regarding the like-kind status in the Farm Bill! More to come on this later, but for now, please allow me to announce that the provision contained in the Senate version of the Farm Bill that sought to re-define the concept of "like-kind" in relation to Section 1031 tax-deferred exchanges HAS BEEN REMOVED from the bill by the members of the conference committee! Word was just received at the headquarters of the Federation of Exchange Accommodators about 25 minutes ago of the success of our grassroots effort to educate the members of … (3 comments)
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iowa exchanges: Midwest Farmland Prices Spike Higher During 2007 - 01/22/08 09:52 AM
Midwest Farmland Prices soared during 2007, according to the Des Moines Register today. According to the appraisers at Farm Credit Services of America, farmland prices increased 20% or more in three of the four states covered by the organization (Iowa, South Dakota, and Wyoming) during 2007, with the fourth (Nebraska) close behind at 19.6%. Kirk Manker, chief appraiser, credits profitable commodity prices, increasing yields, relatively low interest rates, and ethanol production for the increase in Midwest farmland prices. A secondary factor cited by Mr. Manker is the decreased value of the dollar compared to other currencies, which has the effect of … (5 comments)
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iowa exchanges: Midwest Farmland Exchanges: Cause of High Land Values or Merely Effect? - 01/21/08 04:14 PM
Are Farmland Exchanges occurring in the Midwest in states such as Iowa the cause of high land values or merely an effect?
The answer depends upon who you ask, but my personal opinion is that high Midwest farmland values are a lot more likely the result of the increased need for corn to be used in the production of ethanol than land owners using Section 1031 exchanges to increase their holdings. Corn prices have languished around $2.00 per bushel for years up until the last fifteen months or so. There is a chart here that shows corn pricing since the early … (5 comments)
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iowa exchanges: The Next Verse... Today's Update on the Farm Bill - 01/15/08 06:41 PM
I hope you're hanging in there with me on this subject. It seems like there's a new development every day or so now.
Yesterday I posted on the fact that Congress is back in session and the Farm Bill is something that they will be working on putting together as soon as possible, given that the spring planting season will be upon us before long. Here's today's news:
On Monday (yesterday), there was a revision issued in relation to estimated revenues to be raised by the reclassification of like-kind status regarding subsidized farm land. The original estimate was an increase of … (9 comments)
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iowa exchanges: The Farm Bill - The Latest News Regarding Section 1031 - 01/11/08 07:25 PM
As part of a continuing effort to keep you up to date on the implications that the Farm Bill currently being considered in Washington, DC. may have on Section 1031 tax-deferred exchanges, here's the latest: As you know if you have read my two previous blogs on this subject (the original and the update), the Farm Bill passed through the Senate in mid-December 2007 with one very important subsection (Section 12504) that would redefine the concept of like-kind in regards to Section 1031 tax-deferred exchanges. The essence of the change is to redefine all farm land that receives any government subsidy … (5 comments)
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iowa exchanges: The 45-Day Identification Period - A Hindrance or Not So Much? - 01/11/08 11:07 AM
Part of a successful Section 1031 tax-deferred exchange is meeting the requirement that potential replacement properties be properly identified within forty-five calendar days after the closing of the relinquished property.
Time out for definitions: Replacement property = the properties that an exchanger would consider purchasing to replace the ones s/he is selling; Relinquished property = the property or properties that the exchanger is selling.
Some property owners who have thought about starting a Section 1031 tax-deferred exchange are concerned about the 45-day period being too restrictive. For that matter, many exchangers who have both successfully and unsuccessfully attempted an exchange feel … (12 comments)
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iowa exchanges: European-Based Insurance Group to Create U.S. Headquarters in West Des Moines - 01/08/08 12:00 PM
The acquisition of land in West Des Moines for the United States headquarters of London-based Aviva was finalized recently. Aviva is the fifth-largest insurance group in the world based on gross worldwide premiums as of 12/31/06. Aviva US is ranked #1 in sales of "indexed life insurance," which appears to be one of the new code words for whole life policies.
The new facility will house Aviva's 360,000 square foot office building and corporate campus. It will be located on the southwest corner of the intersection of Jordan Creek Parkway and Mills Civic Parkway. That makes the new facility situated about 2.5 … (4 comments)
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iowa exchanges: "Home Prices Fall by Record 6.7%" - What Do You Think? - 12/27/07 09:24 PM
The headline in the Des Moines Register Business section today says, "Home prices fall by a record 6.7%." That's in October year-over-year terms, according to the article. The story also notes that October was the 23rd consecutive month during which prices either fell or grew more slowly than they did in the previous month.
According to this article, the previous record decline was 6.3% in April of 1991. On another sunny note, an economist named Patrick Newport with an outfit called Global Insight says that home prices could fall another 10% over the next 12-18 months.
Okay, so that wasn't … (5 comments)
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iowa exchanges: Happy Holidays - 12/26/07 04:52 PM
I feel like I'm just getting started here at activerain, but I wanted to wish anyone who reads this a very Merry Christmas (a day late), a Happy New Year, and happy holidays regardless of what you happen to celebrate. Special wishes to anyone who is spending the holidays away from home serving in the military or in public service of any sort. Be safe and come home soon.
Here's wishing a wonderful 2008 to all regardless of the market conditions. Remember the words of someone who's on the radio quite a lot: something along the lines of "There may be a … (6 comments)
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iowa exchanges: Iowa Farmland Sees Its Greatest Increase in Value Since 1976 - 12/19/07 05:22 PM
According to the Des Moines Register, Iowa farmland prices set a record this year for the fifth year in a row. The average price of farmland in Iowa is now $3,908 per acre. This is based upon an annual survey conducted and released by the Iowa State University Extension.
Here’s the big news - $3,908 per acre is a 22% increase over last year’s average, which is the largest one-year increase since 1976. Pretty sweet ROI, huh?
Why would this be, in this era of slow real estate markets? Two reasons, according to the survey respondents:
Higher corn and soybean prices … (6 comments)
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iowa exchanges: Update on the Farm Bill and Its Impact on Section 1031 - 12/19/07 04:59 PM
A little over a month ago, I wrote a blog about Section 12504 of the Farm Bill that was under consideration by the Senate at the time. (You can read it here.) The focus of the blog was the general impact on Section 1031 that a particular subsection of the bill might have. The gist of the whole thing was that the proposal sought to redefine the concept of "like-kind" property, which until now has had a very broad definition when it comes to real estate. (You can exchange raw land for an apartment building, three rental houses for an industrial … (30 comments)
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iowa exchanges: An Iinteresting and Fun Experience - 12/17/07 09:45 PM
Something interesting happened last week, and it turned out to be a lot of fun. I had the opportunity to visit by phone with another ARer, Jason Smith. Jason is exactly the kind of real estate agent I like to deal with when I need someone to represent me: the kind that is interested in broadening his horizons and learning about new things. Jason had asked me some questions about Section 1031 exchanges, and the two of us just decided that it made the most sense to get on the phone and talk about things.
One of the things that I … (2 comments)
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iowa exchanges: Dealer Property Issues—Property Held for Sale - 12/17/07 05:03 PM
There is often confusion when it comes to defining what property qualifies for an exchange. Sometimes it is easier to describe situations that do not qualify. Real estate that is owned as “stock in trade or other property primarily for sale” cannot be exchanged. This type of property is deemed to be that of a dealer, which is held for sale to customers during the ordinary course of business. This type of sale is taxed as ordinary income.
SUBSTANTIATING THE INVESTMENT INTENT
The defining factor for qualification for a §1031 exchange is the taxpayer’s “intent” at the time of purchase. Was … (4 comments)
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iowa exchanges: The Anatomy of a Simple Exchange Transaction - 12/11/07 07:28 PM
One of the most common questions I get asked is something along the lines of "Can you just explain to me how an exchange actually works?" Just as no two real estate sales are identical, no two exchanges are the same. What this blog attempts to do, however, is present the steps of a typical delayed exchange transaction in a simplified format. A basic exchange is actually a fairly simple process, but many, many considerations must be made in order to ensure that the exchange is done properly to qualify for tax deferral.
THE FIRST STEP
The first step of a … (6 comments)
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iowa exchanges: A Serious Threat to Section 1031—Section 12504 of the Current Farm Bill - 11/13/07 10:28 AM
Until this point, my blogs have consisted of setting out the benefits of Section 1031 exchanges and the mechanics of the actual exchange. Today I want to address a critical issue regarding the future of tax-deferred exchanges.
SECTION 12504
Many of you do not follow the industry of agriculture very much; I’ll admit it, I don’t either. I live in metropolitan Des Moines, Iowa, which to those of you on the coasts may conjure up images of corn fields and hogs. Those of you in the Midwest, however, know the reality. Yes, we have many farms in Iowa, and yes, … (7 comments)
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iowa exchanges: “Held for Investment”—What's That? - 11/08/07 04:31 PM
“HELD FOR INVESTMENT”—WHAT'S THAT?
The actual wording of Internal Revenue Code §1031 says that in order to qualify for tax-deferred treatment, the property owner must sell property that has been “held for productive use in a trade or business or for investment” (emphasis added) and purchase property of like-kind. Often, potential exchangers want to know how long they have to own property to establish that it has been “held for investment.” Unfortunately (or perhaps fortunately), neither the IRS nor the Regulations gives us a complete answer on that subject. If some specific time frame were established, it would certainly be an … (0 comments)
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iowa exchanges: What Real Estate Agents Need to Know About §1031 Tax-Deferred Exchanges - 10/26/07 04:37 PM
It's clear that Section 1031 tax-deferred exchanges provide real estate agents a tremendous opportunity to increase commissions. But more importantly, you are serving your client's best interest when you are able to recognize an opportunity for a tax-deferred exchange. Think about it. What's better for your client? Paying taxes, or being able to put more money into a property by deferring those taxes? At Iowa Equity Exchange, we say, "Help your clients grow their investments, not their tax bills!" We also say, "Help yourself by helping your clients."
Here are a few questions that are commonly asked by real estate agents:
… (2 comments)
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iowa exchanges: Section 1031 Tax-Deferred Exchanges—An Overview - 10/24/07 04:18 PM
WHAT IS SECTION 1031?
Section 1031 of the Internal Revenue Code (IRC) allows an owner of investment property to defer the payment of federal and state capital gain taxes by purchasing “like-kind” property following the rules and regulations of the IRC. Capital gain taxes are typically 15% of the gain, plus 25% recapture of depreciation taken, plus applicable state taxes, which in Iowa are presently 8.98%. (Adding just the federal capital gain tax to the Iowa capital gain tax results in taxes of 24% of the investor's gain. Depreciation recapture can add another significant amount onto the 24%, often pushing the … (2 comments)
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iowa exchanges: Tax-Deferred Exchange 101 - 10/18/07 05:01 PM
I thought for my first blog post I would provide an overview of what Section 1031 tax-deferred exchanges are all about. This is going to be geared toward those folks who have never heard of tax-deferred exchanging, or perhaps they've heard of them but don't know much at all about them. Let's start out with some background:
EXCHANGES ARE A POWERFUL TAX STRATEGY
Tax-deferred exchanges have been a part of the tax code since 1921 and are one of the last significant tax advantages remaining for real estate investors.
One of the key advantages of a §1031 exchange is the ability … (4 comments)
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Ken Tharp - Section 1031 Exchanges, Iowa/U.S.
West Des Moines,
IA
More about me…
Iowa Equity Exchange
Address: Des Moines, Iowa, Nebraska, Kansas, Oklahoma, Missouri, South Dakota, North Dakota, Minnesota, Wisconsin, Illinois, Indiana
Office Phone: (800) 805-1031
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