iowa farmland exchanges: Iowa Farmland Value Report - 03/12/09 09:50 AM
In a further confirmation that values have peaked at least for now, the REALTORS® Land Institute semi-annual survey shows a 7.6% drop in the price for farmland over the six months ending February 28 of this year. This survey is conducted every six months and consists of input from the state's farmland real estate community. The previous survey indicated an increase of 6.6%. The previous twelve months, therefore, show approximately a 1% drop in values.
No one is necessarily panicking about this drop or leveling off, however. According to Troy Louwagie, REALTOR® with Hertz Farm Management and also the spokesman for … (2 comments)

iowa farmland exchanges: Have Iowa Farm Land Values Peaked? - 03/06/09 08:28 AM
In what could hardly be termed a surprise, the Des Moines Register reported on February 21, 2009 that farm land values in Iowa declined 6% during the final quarter of 2008 according to the Federal Reserve Board of Chicago. This is the first such drop in a decade. The primary contrbuting factor is the sharp decline in commodity values since the summer, in many cases as much as a 50% drop.
The 6% drop in Iowa was discovered during a survey of 209 banks in the upper Midwest, including not only Iowa, but Indiana, Illinois, Wisconsin and Michigan as well. Iowa's … (2 comments)

iowa farmland exchanges: Is the Term "Like-Kind" Confusing to You? Here's a Simple Explanation - 03/02/09 08:35 AM
Does it confuse you when you hear that property in an exchange must be exchanged for "like-kind" property? In the talks that I give to real estate agents, investors, attorneys and accountants, I think I've hit on an easy way to determine whether or not the property being sold is like-kind to the property being purchased.
Before getting into the details, let's first establish that virtually all real estate is like-kind to virtually all other real estate. That makes it pretty simple, doesn't it? But there is one major qualifier. Property in an exchange must have been "held as an investment … (0 comments)

iowa farmland exchanges: The 45-Day Identification Period - A Hindrance or Not So Much? - 01/11/08 03:07 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)

iowa farmland exchanges: European-Based Insurance Group to Create U.S. Headquarters in West Des Moines - 01/08/08 04:00 AM
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)

iowa farmland exchanges: "Home Prices Fall by Record 6.7%" - What Do You Think? - 12/27/07 01:24 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)

iowa farmland exchanges: Iowa Farmland Sees Its Greatest Increase in Value Since 1976 - 12/19/07 09:22 AM
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 … (7 comments)

iowa farmland exchanges: Dealer Property Issues—Property Held for Sale - 12/17/07 09:03 AM
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)

iowa farmland exchanges: The Anatomy of a Simple Exchange Transaction - 12/11/07 11:28 AM
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)

iowa farmland exchanges: “Held for Investment”—What's That? - 11/08/07 08:31 AM
“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)

iowa farmland exchanges: What Real Estate Agents Need to Know About §1031 Tax-Deferred Exchanges - 10/26/07 09:37 AM
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)

iowa farmland exchanges: Section 1031 Tax-Deferred Exchanges—An Overview - 10/24/07 09:18 AM
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)

iowa farmland exchanges: What Is A Qualified Intermediary? - 10/22/07 09:48 AM
Let's talk about what a Qualified Intermediary does, and even what a Qualified Intermediary is. The Internal Revenue Code establishes the use of a Qualified Intermediary as a "Safe Harbor" for the performance of a tax-deferred exchange under the rules and regulations of Section 1031. What's a Safe Harbor? Essentially, it means that if an individual conducts his or her exchange within certain boundaries, the exchange cannot be challenged; it is within a safe harbor in that case.
SO WHAT'S A QUALIFIED INTERMEDIARY? 
Certain entities can function as a Qualified Intermediary. It's easier to talk about who cannot be a QI … (0 comments)

iowa farmland exchanges: Tax-Deferred Exchange 101 - 10/18/07 10:01 AM
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)