kern: Concise Overview of 1031 Exchanges - Series V - 05/06/08 04:14 PM
Concise Overview of 1031 Exchanges - Series V
1031 Exchange Identification Requirements
You must identify your potential like-kind replacement properties to your Qualified Intermediary within the 1031 exchange time limits discussed above.  The identification must comply with one (1) of the like-kind replacement property identification rules outlined below:
Three (3) Property Identification Rule
The three (3) property identification rule is the most common rule and is used in most 1031 Exchange transactions.  This rule allows you to identify up to but not more than three (3) potential like-kind replacement properties.  It is highly advisable that you identify three (3) properties even if your intent … (2 comments)

kern: Concise Overview of 1031 Exchanges - Series IV - 05/06/08 04:11 PM
Concise Overview of 1031 Exchanges - Series IV
1031 Exchange Structures
The most common 1031 exchange structure is a forward, or delayed, 1031 exchange where you sell your relinquished property first and then acquire your like-kind replacement properties within the prescribed 1031 exchange deadlines.  A reverse 1031 exchange allows you to acquire your like-kind replacement property first and then subsequently dispose of your relinquished property within the prescribed 1031 exchange deadlines.  An improvement (build-to-suit or construction) 1031 exchange allows you to use your 1031 exchange funds to acquire like-kind replacement property and to use your excess 1031 exchange funds to construct or improve … (0 comments)

kern: Concise Overview of 1031 Exchanges - Series III - 05/06/08 04:08 PM
Concise Overview of 1031 Exchanges - Series III
Like Kind Property Requirement
There is a lot of misinformation regarding what constitutes like-kind replacement property.  It is not true that if you sell a condo you must acquire a condo, etc.  As long as your relinquished and replacement properties meet the qualified use requirement discussed above any kind of real estate held for investment is like kind to any other kind of real estate that is also held for investment. 
You can exchange out of or into any of the following asset types: single family, multi-family, commercial office, retail shopping, industrial, vacant land, oil … (0 comments)

kern: Concise Overview of 1031 Exchanges - Series II - 05/06/08 04:06 PM
Concise Overview of 1031 Exchanges - Series II
Reinvesting or Replacing Your Investment Values
You must acquire one or more like-kind replacement properties that are equal to or greater in net purchase value than the net sales value of the relinquished property you sold.  You must reinvest all of your net cash proceeds from the sale of the relinquished property.  And, you must replace the debt that was paid off on the sale of the relinquished property with an equal amount of debt on the like-kind replacement property. 
You can always add more cash into your purchase of your like-kind replacement properties, … (0 comments)

kern: Concise Overview of 1031 Exchanges - Series I - 05/06/08 04:04 PM
Concise Overview of 1031 Exchanges - Series I
Concise Overview of 1031 Exchanges
The 1031 Exchange may not always be the right or best solution for your specific situation, so you should consider whether other tax deferral or tax exclusion strategies might be more appropriate and you should always consult with your legal, tax and financial advisors before entering into any real estate transaction, especially a 1031 Exchange.
This article has been written as a concise overview of 1031 Exchanges.  It is only a brief summary to assist you in understanding the very basic 1031 Exchange requirements. You can read an Introduction to Section … (0 comments)

kern: Concise Overview of 1031 Exchanges - Series II - 05/03/08 08:27 AM
Concise Overview of 1031 Exchanges - Series II
Reinvesting or Replacing Your Investment Values
You must acquire one or more like-kind replacement properties that are equal to or greater in net purchase value than the net sales value of the relinquished property you sold.  You must reinvest all of your net cash proceeds from the sale of the relinquished property.  And, you must replace the debt that was paid off on the sale of the relinquished property with an equal amount of debt on the like-kind replacement property. 
You can always add more cash into your purchase of your like-kind replacement properties, … (2 comments)

kern: Short Sales and the 1031 Exchange - 05/02/08 04:03 PM
Short Sales and the 1031 Exchange
 
The question was asked of me, "can I exchange into a short sale property".  The easy answer is YES!  Of course there are a lot of what ifs with that answer.
 
First is both the lender and seller must agree to the terms of the sale.
 
That seems easy however nothing ever is.  In my clients case there were two loans made out on the same day, a 1st and a 2nd.  So now both lenders must agree, that's when the first of many issues start.
 
Second is the exchanger only has 45 days to ID the replacement property.
 
This … (10 comments)

kern: Concise Overview of 1031 Exchanges - Series I - 05/02/08 03:08 PM
Concise Overview of 1031 Exchanges - Series I
Concise Overview of 1031 Exchanges
The 1031 Exchange may not always be the right or best solution for your specific situation, so you should consider whether other tax deferral or tax exclusion strategies might be more appropriate and you should always consult with your legal, tax and financial advisors before entering into any real estate transaction, especially a 1031 Exchange.
This article has been written as a concise overview of 1031 Exchanges.  It is only a brief summary to assist you in understanding the very basic 1031 Exchange requirements. You can read an Introduction to Section … (0 comments)

kern: What is Qualified Use in 1031 Exchanges - 05/01/08 03:22 PM
What is Qualified Use in 1031 Exchanges
Qualified Use Property
Your relinquished property must have been held by you for rental, investment or use in your business. And, you must have the INTENT to HOLD your acquired like-kind replacement properties for rental, investment or use in your business.
Property not held for rental, investment or use in your business will not be considered to be qualified use property and will generally not qualify for 1031 exchange treatment.
For example, property acquired by you with the INTENT to fix-up and then sell ("flipping") will actually be classified as property HELD for SALE rather … (0 comments)

kern: 1031 Exchange into a 721 or an upREIT - 05/01/08 02:02 PM
1031 Exchange into a 721 or an upREIT
Please review to gain additional knowledge contact me.
Section 721 - Exchange of Property Into A Real Estate Investment Trust (REIT)
Section 721 of the Internal Revenue Code ("721 Exchange") allows you to exchange your rental or investment real estate for shares in a Real Estate Investment Trust (REIT).  This is called a 721 exchange - also known as an upREIT or 1031/721 exchange.
You would typically utilize the upREIT in conjunction with selling relinquished property and acquiring like-kind replacement property pursuant to Section 1031 of the Internal Revenue Code.  Once the replacement property has been held as … (0 comments)

kern: Local Knowledge, Nationwide - 05/01/08 01:58 PM
Local Knowledge, Nationwide
Fresno and the San Joaquin Valley is growing steadily, but we're still a small community at heart.  People here like doing business with well-established local companies with solid reputations.  They look for those qualities in their legal, tax and financial advisors.  They deserve the same from their 1031 Exchange Qualified Intermediary ("Accommodator").
Exeter 1031 Exchange Corporation is a local 1031 Exchange Qualified Intermediary, with roots firmly planted in this community.  But we're backed by the financial strength, stability and national reach of a company that's been in the real estate settlement services industry for more than 80 years. 
We have … (0 comments)

kern: 1032 Exchange, What is it? - 05/01/08 01:36 PM
1032 Exchange, What is it?
Section 1032 - Exchange of Corporation Stock for Property
Section 1032 of the Internal Revenue Code ("1032 Exchange") provides that no gain or loss shall be recognized to a corporation on the receipt of money or other property in exchange for stock (including treasury stock) of such corporation.
This type of exchange transaction does not apply to real estate and there is no need for a Qualified Intermediary.
Steve
 
(0 comments)

kern: 1031 or 1033 exchange questions - 04/30/08 03:57 PM
1031 or 1033 exchange questions
If anyone has 1031 or 1033 exchange questions please let me know.  My company focuses on the more difficult exchange issues.  I'm a local QI in the San Joaquin area, my company has local investors, local office and local banking relationship to deposit clients exchange funds into.   If you have any questions about exchanges please give me a call, and we can review all the options that are available to you, and your clients.  … (4 comments)

kern: 1031 Exchange what is it? - 04/30/08 03:49 PM
Section 1031 - 1031 Exchange of Property Held for Investment
Section 1031 of the Internal Revenue Code ("1031 exchange") provides that property held as rental or investment property or property used in your business ("relinquished property") can be exchanged for "like-kind" property also held as rental or investment property or property used in your business ("replacement property") allowing you to defer your Federal, and in most cases, state capital gain and depreciation recapture income tax liabilities.
It is important to note that 1031 exchange transactions are tax-deferred exchanges - not tax-free exchanges - as many speakers, authors and advisors frequently refer to them.  Your … (2 comments)

kern: Can Closing Costs be included in a 1031 Exchange - 04/23/08 05:13 PM
Closing Costs
A. There is little definitive authority in the IRC or Regulations as to whether the
taxpayer incurs a tax liability on amount of money paid for closing expenses
B. The payment of real estate brokerage commissions does not result in taxable boot
Revenue Ruling 72-456, 1972-2 CB 468
i. Commissions paid by the taxpayer are added to the basis of the replacement
property
C. Most tax experts conclude that the payment of many non-recurring costs of sale or
purchase from the exchange proceeds should not create taxable boot
i. Title insurance premiums
ii. Escrow or closing agent fees
iii. Recording fees
iv. Intermediary fees
v. Documentary transfer taxes
vi. Legal fees
vii. Property inspections
D. … (4 comments)

kern: IRC Section 121 – Exclusion of Capital Gain from the Sale of Principal Residence IRC - 04/23/08 04:38 PM
IRC Section 121 - Exclusion of Capital Gain from the Sale of Principal Residence IRC
§121; 1997 Taxpayer Relief Act
i. Amount of gain excluded from gross income shall not exceed $250,000 for
individual taxpayers and $500,000 for married taxpayers filing jointly
ii. Must have been the principal residence of taxpayer (both spouses) 24 out of last
60 months
1. Months do not have to be consecutive
iii. Application is limited to 1 sale every 2 years
iv. A portion or all of the taxable gain may be excluded if the failure to comply is
due to change of employment or health, or other unforeseen circumstances
(0 comments)

kern: Partnership interest and 1031 Exchanges - 04/23/08 04:28 PM
A. Partnership interests are not exchangeable
B. Partnerships can complete a 1031 exchange
C. Problems may occur when partners have different investment goals
i. Cash out of partnership
ii. Sell rather than exchange
iii. Solutions
1. Partnership dissolves under IRC Section 708
2. Partnership completes exchange; refinances property; distributes cash to
partners who do not want to participate in the exchange
3. Partnership completes exchange; reorganizes under co-tenancy ownership,
where two or more owners each hold an undivided fractional interest in
property; distributes property according to each co-tenant's pro-rata interest
4. Partnership reorganizes under co-tenancy ownership where each owner has
an undivided fractional interest in property; each co-owner pursues its
individual investment goals
a. Has the … (2 comments)

kern: IRC Section 1033 – Involuntary Conversions of Property IRC §1033 - 04/23/08 04:18 PM
IRC Section 1033 - Involuntary Conversions of Property IRC §1033
i. Non-recognition of gain when exchange proceeds are reinvested in property that
is similar or related in service or use to the property involuntarily converted
1. Section 1033A - Property loss or destruction, such as earthquakes
a. Replacement period of 2 years
2. Section 1033G - Eminent domain
a. Replacement period of 3 years
If you have any questions relating to 1031 exchanges or the qualified use requirement, please contact me at:
EXETER 1031 EXCHANGE SERVICES, LLC
Steven W. Monk
Vice President and Regional Manager
(0 comments)

kern: Property that can not be 1031 Exchanged - 04/21/08 05:41 PM
Excluded Property
i. Property held for personal purposes, such as homes, automobiles, or boats
ii. Cash
iii. Stock in trade or other property held primarily for sale, such as inventory, raw
materials, and real estate held by dealers
iv. Stocks, bonds, or notes, or other securities, or evidences of indebtedness, such
as accounts receivable
v. Partnership interests
vi. Certificates of trust or beneficial interests
vii. Choses in action
EXETER 1031 EXCHANGE SERVICES, LLC
Steven W. Monk      
Vice President and Regional Manager
(2 comments)

kern: Holding Period for 1031 Exchanges - 04/21/08 05:12 PM
Holding Period
i. Exchanges between unrelated parties - Holding requirements are not clearly
defined
ii. Exchanges between related parties require a minimum holding period of two
years
1. Related parties include
a. Family members (spouses, siblings, parents, and children, but not
cousins, uncles, aunts, in-laws, stepparents, nephews, nieces, or exspouses)
b. Two corporations that are members of the same controlled group or that
are controlled by the same individuals
c. A grantor and a fiduciary or a fiduciary and a beneficiary of the same
trust
d. A partnership in which a person owns directly or indirectly more than
50% of the capital interest or profits interest
e. A corporation and a partnership in which the … (0 comments)

 

Steven W. Monk

V. P., 1031 Exchange Expert

Fresno, CA

More about me…

Exeter 1031 Exchange Services

Address: 516 W Shaw, Suite 200, Fresno, CA, 93704

Office: (559) 221-2517

Mobile: (559) 307-5091






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