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Using Reverse Exchanges as a Tool in a Changing Market

Exchange Update

Many investors are aware of their ability to use a reverse 1031 exchange when they are faced with having to close on their replacement property before they are able to close on their sale property; however, reverse exchanges can also be used proactively when tight inventory creates purchasing challenges.

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Extensions Announced for 1031 Deadlines

Exchange Update

Notice 2020-23 (which updates Notice 2020-18, “Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic”), released on April 9, 2020, provides Taxpayers who are currently engaged in a 1031 exchange some relief from the 45-Day Identification and 180-Day Exchange Period deadlines.

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Madera Among Fastest-Growing Counties in Western U.S.

Construction Photo

MADERA COUNTY — According to the latest government data, Madera County is outpacing other similar-sized counties, both in California and around the western U.S., in terms of economic growth.

Recently published United States Bureau of Economic Analysis records show that for 2018, the latest year for which statistics have been compiled, Madera County saw the fastest growth in real GDP among the Far West Region’s “medium-sized” counties.

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Drop and Swap – Dissolution of Partnerships Prior to Exchanging

Exchange Update

When a partnership is selling property and some of the partners want to cash out and others want to reinvest, it can create complications with a 1031 exchange.  There are a couple of reasons for this.  First, under IRC § 1031(a)(2)(D), partnership interests are not exchangeable.  Second, the taxpayer that sold the relinquished property must acquire the replacement property. For example, if a partnership sells the relinquished property, that same partnership must buy the replacement property.  If individual partners buy the replacement property, it will not be a valid exchange.

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WE’RE BACK, BABY! FRESNO TOP AG COUNTY ONCE AGAIN

Navel Oranges Packing

For the first time since 2013, Fresno County is the top agricultural county in California and the U.S.

This news comes with the Tuesday morning release of the 2018 Tulare County crop and livestock report, which shows sales of agricultural goods produced there last year totaled more than $7.21 billion, a 2.5% increase from ag sales in 2017.

 

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Converting Investment Property to Your Primary Residence

Exchange Update

With a large population of baby boomers reaching retirement age it becomes extremely important to plan and take advantage of all the tax-saving strategies that are available. Most investors think about the immediate tax benefits of completing a 1031 exchange but may not consider the additional long-term benefits of the tax deferral. An exchange provides the opportunity to apply pre-tax dollars towards replacement property and put that money to work.

 

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Just the Basics: Tax-Deferred Exchanges Under IRC §1031

Exchange Update

Knowing some basic rules behind Internal Revenue Code 1031 can help investors defer paying capital gain tax on property dispositions, resulting in more money to invest in new property acquisition. Generally, any real property can be exchanged, provided it is held “for productive use in a trade or business” or for “investment” and is exchanged for property of “like-kind” that will also be held for one of these same purposes.

 

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Top Ten 1031 Exchange Misconceptions

Exchange Update

1. Like-kind means I must exchange the same type of property, such as apartment building for apartment building.

All real property is like-kind to other real property. For example, you can trade an apartment building for an office building. To read more about like-kind real estate, click here.

2. My attorney can handle this for me.

Not if your attorney has provided you any non-exchange related legal services within the two-year period prior to the exchange. Click here to read more about qualified and disqualified parties.

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Deferring Tax on Mixed Use Properties

Exchange Update

Utilizing IRC Sections 1031 and 121

When it comes to issues related to capital gains taxes associated with the sale of real estate, there are two primary provisions of the tax code that apply, IRC Section 1031 and IRC Section 121.  Many people are unaware that when a property is used as a personal residence as well as for business or investment purposes, it is a mixed-use property that can benefit from both provisions of the tax code at the same time.

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