iowa section 1031: Apartment Sales Report - Des Moines, Iowa - 01/27/09 08:30 AM
I hate negative news. But facts is facts. When it comes to the sale of apartment properties in the Des Moines market, there's not a lot of positive news right now. If you only want positive news, skip to the last paragraph and I'll give you the best spin I can come up with.
According to Rick Krause, Senior Associate with CBRE Richard Ellis/Hubbell Commercial, sales transactions involving apartment buildings in Polk County were down 48% in 2008 compared to 2007. Dollar volume was down an even higher percentage: 62%. This information comes from Rick's self-published monthly newsletter, the Central Iowa Income … (2 comments)

iowa section 1031: Liquidity of funds - doesn't sound exciting? Read on... - 01/22/09 04:41 AM
What could be more exciting than a discussion of the liquidity of funds, right? Okay, so it sounds pretty dry. Let me try to explain why it's actually of critical importance.
In my opinion, the cornerstone responsibility that a Qualified Intermediary has to his client is to protect the client's money while it's in the QI's possession. If the QI does something that makes it so his client's money isn't available when it's needed, or isn't worth as much as it was when it was transferred to the QI, then it really doesn't matter how well the QI prepared the documents, … (0 comments)

iowa section 1031: Section 1031 Exchanges and the Auction Industry (Part 3) - 01/14/09 05:57 AM
In the summer of 2008, I was honored to be asked to author an article for The Auctioneer, the official publication of the National Auctioneers Association, on the subject of Section 1031 exchanges and their application within the auction industry. The article was published in the September 2008 issue. If you would like to access the article online, it can be found on pages 62-64 of this link: The Auctioneer. The article is reprinted in three blog entries; this is the third of the three. (Part 1 can be found here; Part 2 here.)
What is the difference between the exchange … (3 comments)

iowa section 1031: Section 1031 Exchanges and the Auction Industry (Part 2) - 01/14/09 05:34 AM
In the summer of 2008, I was honored to be asked to author an article for The Auctioneer, the official publication of the National Auctioneers Association, on the subject of Section 1031 exchanges and their application within the auction industry. The article was published in the September 2008 issue. If you would like to access the article online, it can be found on pages 62-64 of this link: The Auctioneer. The article is reprinted in three blog entries; this is the second of the three. (Part 1 can be found here.)
Specific questions about exchanges and auctions:
When should I … (0 comments)

iowa section 1031: Section 1031 Exchanges and the Auction Industry (Part 1) - 01/14/09 05:07 AM
In the summer of 2008, I was honored to be asked to author an article for The Auctioneer, the official publication of the National Auctioneers Association, on the subject of Section 1031 exchanges and their application within the auction industry. The article was published in the September 2008 issue. If you would like to access the article online, it can be found on pages 62-64 of this link: The Auctioneer. The article is reprinted in three blog entries; this is the first of the three:
 
The purpose of this article is to provide basic information about Section 1031 exchanges and … (0 comments)

iowa section 1031: Section 1031 Exchanges - The Basics (Article #3) - 01/14/09 04:19 AM
This is the third of three blog entries about the basics of Section 1031 exchanges. The first entry can be found here, Article #1, and the second entry is here: Article #2.
Quick review... the first hurdle for the standard exchange is that the properties must qualify. Second, you must establish your intent to exchange in writing prior to closing of the property you are relinquishing. Third, you must identify the property you intend to purchase using the guidelines allowed. Moving on to the final requirement...
#4 - Acquire the replacement property. Again going back to the date of closing of … (0 comments)

iowa section 1031: Section 1031 Exchanges - The Basics (Article #2) - 01/14/09 04:07 AM
This is the second of three blog entries about the basics of Section 1031 exchanges. The first entry can be found here: Article #1
Quick review... the first hurdle for the standard exchange is that the properties must qualify. Moving on...
#2 - Establish your intent to exchange. Now that you have determined that the property you are selling and a property you can envision buying will qualify, you must enter into a written agreement with your exchange company to establish your intent to exchange. This must be done prior to the closing of the sale of your property. At closing, … (0 comments)

iowa section 1031: Section 1031 Exchanges - The Basics (Article #1) - 01/14/09 03:50 AM
I was recently asked to write a short article for a local publication about the basics of Section 1031 exchanges. Over the time I've been here at activerain, my blog topics have covered a wide range of exchange-related topics, including the basics. However, it has been a long time since I've addressed that basic information. Writing the article caused me to realize that was the case, so this is an attempt to remedy that situation. With that in mind, here is the first of three blog entries having to do with the four basic hurdles for the standard 1031 exchange:
What … (0 comments)

iowa section 1031: Farmland prices leveling off? - 11/24/08 02:01 AM
In an article in the Des Moines Sunday Register, author Dan Piller investigates the value of farmland in Iowa based upon the results of a number of recent farm auctions. The conclusion? Farmland values are not rising at the rate they have over the past few years. Probably not a huge revelation to those of us who keep track of things, nor a huge surprise to those of you who don't. The current macro-economic conditions in this country and the world affect farm prices just as they touch virtually every other aspect of our lives.
However, the good news is that … (2 comments)

iowa section 1031: Thanksgiving Time - 11/19/08 05:34 AM
As Thanksgiving approaches, it's an interesting time in our country and the world. (Have you heard the saying, "May you live in interesting times?" I had always thought of that saying as a blessing, but it appears that it may have first started as a curse, at least if you can believe the Wikipedia entry: Wiki it.) At any rate, counting our blessings is never more common than at this time of the year. And even in this turbulent time, with our stock market imploding and taxpayer money flying around like confetti, it's still important to take stock of ourselves and … (0 comments)

iowa section 1031: Exchanging Foreign Properties - 11/12/08 11:09 AM
What if you own property outside of the United States and you want to utilize Section 1031 for a tax-deferred exchange of that property? Is that okay?
The short answer is, "It depends." It depends upon where your property is located and where the property you wish to acquire is located. Essentially it comes down to "US property for US property" and "foreign property for foreign property." The reason for this is that the code does not consider non-US property to be like-kind to US property. The Virgin Islands and Guam, though, are US territories and can be exchanged for all … (2 comments)

iowa section 1031: Development Rights are Like-Kind to Real Property - 11/12/08 10:17 AM
A Private Letter Ruling issued by the IRS relating to a taxpayer's intention to acquire development rights as his replacement property in a 1031 exchange is an interesting situation. In this case, the taxpayer sold a property as his relinquished property in the exchange and gave up his fee interest in that property. As his replacement property, he desired to purchase unused development rights to use on property he already owned in order to do more with the property than was allowed prior to the purchase of those rights. (See Private Letter Ruling 200805012.)
"Development rights" are one of the "bundle … (0 comments)

iowa section 1031: Converting Investment Property to Personal Residence? New Limits on Gain Exclusion! - 10/17/08 08:36 AM
Do you plan to convert an investment property into your personal residence? The Housing Assistance Tax Act of 2008 that President Bush signed into law on July 30, 2008 carries a provision that affects the practice of excluding gain when you sell a property that was once used for another purpose, such as a rental property, and then converted into your personal residence. The effect of the new law is a restriction on the amount of gain you can exclude through Section 121, the personal residence exclusion section of our tax code.
Section 121 of the Internal Revenue Code allows a … (4 comments)

iowa section 1031: Iowa Land Price Survey Shows 6.6% Rise in Six Months - 09/24/08 09:19 AM
A recent survey of farmland real estate brokers shows that the price of Iowa’s best farmland rose by an average of 6.6 percent from March 2008 through August 2008, cooling slightly versus the previous six month period. This survey was conducted by the Iowa Farm and Land Chapter 2 Realtors Land Institute, as it has been done every March and September since 1978. The RLI is composed of real estate brokers who specialize in farm and land sales, farm management, and appraisals. The results were cited in an article in the Sunday Des Moines Register on September 17, 2008.
Troy Louwagie, … (2 comments)

iowa section 1031: Quick Update on National Farmland Prices - 09/03/08 07:32 AM
About a month ago, the US Department of Agriculture published its annual report on the value of agricultural land in the United States. As you might expect, values were up nearly everywhere, but especially in the Midwest.
High prices on commodities such as corn, soybeans and wheat drove prices higher in the Northern Plains region, which encompasses states such as Kansas, the Dakotas, and Nebraska. Average farmland values increased 15.5 percent in that region, the highest increase on a percentage basis in the country.
On a per-acre basis, the most expensive farmland in the US was in Massachusetts - $12,200 per … (5 comments)

iowa section 1031: What about Refinancing Before or After an Exchange? - 09/03/08 06:57 AM
The primary objective of most Section 1031 exchanges is to move an investment from one property to another without incurring a tax liability. In other words, take your money out of this property and put it into that property and pay no capital gain tax. By following the rules and regulations of Section 1031 properly, an investor can accomplish that without having a capital gain tax bill.
Occasionally someone we work with will ask a question similar to this: “How about if I refinance my property and pull cash out, then do an exchange into another property? Borrowed cash is tax-free, … (1 comments)

iowa section 1031: West Central Iowa Board of Realtors Meeting - 08/22/08 07:09 AM
If you are in the western Iowa/eastern Nebraska area, please consider attending the West Central Iowa Board of Realtors meeting at 6:00 PM on Monday, September 8, 2008 at the Harlan, Iowa Golf and Country Club. The board has asked me to speak on the basics of Section 1031 exchanges. You have my promise that it won’t go on too long and I’ll cover the essentials in a no-nonsense, plain English manner. Non-members are welcome and they pay the same price as the members!
If you are interested, please get in touch with me in order to make a reservation and … (0 comments)

iowa section 1031: Demystifying the Reverse Exchange - 07/24/08 04:40 AM
Reverse exchanges are gaining in popularity, but they are often misunderstood and they can be confusing. Let's investigate the basics of this exchange structure.
Sometimes a situation arises in which an investor or property owner wants to purchase a property but wishes to sell a property that he or she already owns to provide the funds needed to purchase the new property. If the old property sells prior to closing on the new property, the investor can employ a standard Section 1031 exchange to defer capital gain taxes on the sale. But what if the investor needs to close on the … (2 comments)

iowa section 1031: The Farm Bill Does Not Alter the Definition of “Like-Kind” in Regards to Section 1031 Exchanges - 06/23/08 09:35 AM
In order to clarify things in the mind of anyone who is uncertain about it, the farm bill that was passed by Congress does not include the language about like-kind status that those of us in the exchange industry were concerned about. The Senate version of the bill sought to redefine the term “like-kind” as it applies to agricultural ground. The crux of the change was to make land that generated any sort of subsidy from the government for its owner non-like-kind to any other real estate investment. The central objection to that provision, in my opinion, is that the government … (6 comments)

iowa section 1031: The Presidential Election and the Potential for Change in Capital Gain Rates - 06/04/08 01:07 PM
Now that things look to be settled on the Democratic side of things, how do the two candidates look at the current capital gain tax rates? Both candidates seem to be focused on “change” at the moment; does that extend to the capital gain tax rate?
The presumptive nominee on the Republican side, Senator John McCain, expresses the intent to leave the rate at its current level of 15%, which was reduced from 20% in the Income Tax Act of 2003.
The as-of-last-night-presumptive nominee of the Democrats, Senator Barack Obama said early in the campaign that he would move to raise … (6 comments)