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iowa tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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 tax deferred 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
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Address: Des Moines, Iowa, Nebraska, Kansas, Oklahoma, Missouri, South Dakota, North Dakota, Minnesota, Wisconsin, Illinois, Indiana
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