Articles with advanced
information about how 1031 exchanges work...
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• NEW:
05.21.08-
What intermediary would be
so foolish as to invest in enhanced money market
funds? Unfortunately, many have--and
have lost because they didn't know
the difference....
• NEW:
03.19.08-
The IRS has just issued a new ruling
for those who wish to 1031 exchange
a vacation home, but it will certainly
create more controversy than it
settles....
• The Treasury Inspector General
chided the IRS in 2007 for exercising
very little oversight over the
exchange process. So all that
is about to change....
• Ever wonder if investment gurus follow their own advice? Gary
Gorman, owner of 1031
Exchange Experts, LLC, explains
how HE treats his personal investment
property for a future 1031....
• If your only shot at a 1031 exchange is a drop-and-swap, there are some things that you really must do to lessen the chance that the IRS will disallow your exchange...
•
Most
people seem to miss (or perhaps simply
don’t understand)
that Section 1031 is a “form
driven” code section. This
means you must do exactly what
the code section requires. In other
words, you must dot the i’s
and cross the t’s...
• For
years I’ve been writing articles,
warning about the potential problems
inherent in commingling 1031 exchange
funds. Now after these latest problems,
you’d
think that taxpayers would finally
get it and be concerned about their
money...
• With
all the high-profile problems of various
intermediaries in recent years, what's
next? Some states are taking action;
others are taking
cues. Here are a few predictions
about what we might expect...
• The
May 28, 2007 edition of Denver
Business Journal had an interesting
story about the new scrutiny of
the 1031 industry in light of recent
QI defalcations. If you are a Denver
Business Journal subscriber, you
can read this article. If you are
not a subscriber, you can purchase
the article here:
• A
popular tax-deferral trick for
real-estate investors is facing
scrutiny as key middlemen in the
strategy run into financial trouble. If
you are a Wall Street Journal subscriber,
you can read this article online.
If you are not a subscriber, you
can purchase the article here:
• Gorman
said 95 percent of qualified intermediaries
commingle funds, mainly in order
to collect interest from their
clients’ money, which creates huge
problems.
“...it’s virtually impossible to figure out who has what slice of that pot,” he
said.
•One
of the ongoing controversies about
TICs is whether they are real estate
or a security. Which license do
you need to sell them – a
real estate license or a security
license...?”
• The
April 23, 2007 edition of Forbes
Magazine released an interesting
story that illustrates the importance
of choosing reputable QIs. If you
are a Forbes subscriber, you can
read this article. If you are not
a subscriber, you can purchase
the article here:
• This
is a real cause for concern: this
is the first time I've seen the
IRS challenge a state's right to
define for themselves what 'real
estate' is for the purposes of
a 1031 exchange....
• How
can 1031 exchange company management
pay for an exec jet, $3000 hotel
rooms, $1000
nightly meals,
expensive mansions and a Mercedes
for their former investment
manager?
Simple: Use clients’ money. The FBI is now involved....
• Fred & Sue
lived in a home
for five years until they moved.
Unable to sell, they
rented it for two years,
and now the tenant wants to buy
it. Since they meet the requirements
of both code sections, which option
should Fred and Sue take?
•Section
1031 requires the use of a Qualified
Intermediary only if you cannot
sell your Old Property and buy
your New in a simultaneous closing.
A simultaneous closing is easy
if you are trading properties with
your buyer...
• Another sad story
about a 1031 intermediary, bankrupt
and accused of bilking investors
of millions of dollars, illustrating
yet again why savvy investors need
to do their homework before choosing
a QI...
•
Your QI SAYS he
segregates accounts, but how do
you know? If he's dishonest enough
to lie to you about his commingled
accounts, will he be trustworthy
to manage money on your behalf?
Read this to learn how to spot an
honest QI, and the disaster that
might happen if you don't...
•
It's not the first time, and unfortunately
it won't be the last: another QI
gets caught in shady dealings with
the client's money. Read here to
learn what to look for, and what
The Experts are
doing about it on behalf of their
clients...
•
Once again, a bad QI made off with
his client's money, and once again
it was made possible by a commingled
account. This article will show
you how to avoid this situation
by protecting yourself...
•
Of course the bad QI gets punished
by the judge when he plays hard
and fast with his client's money,
but the buck doesn't stop
there... Read here to see how the
innocent clients got
punished, and what you can do to
avoid this in your own situation...
• When
the IRS talks about “personal
property," they’re talking about
stuff that moves (planes, boats, trains,
cars, etc.). If you can move it, the
personal property rules apply...
• “If
you want to invest and
forget, then a TIC may work fine, but
if you’re a hands-on Type A personality
who doesn't like giving up control,
then a TIC will drive you crazy,” said
Gary Gorman, a managing partner at
1031 Exchange Experts in Denver...
•
If Fred and Sue sell their Old Property
in 2006, and buy their New Property
in 2007, In what year is their gain
taxable? When they sell their property,
or when they receive the proceeds?
• Most
people (even many real estate professionals)
tend to think of cash as the same as "gain." Therefore,
according to their thinking, if you
don’t receive any cash from a
sale, you don’t have any gain. And
if you, as the seller, have to bring
cash to the closing, you must have
a loss, right? Wrong!
•
When is exchange boot taxable? In 2005
when you sell the land? Or in 2006
when you received the check from
the intermediary? Because you have
180 days after the sale to complete
the exchange, this is a much more
common occurrence than you would
think...
• Because
the TIC industry is so new, it still
has a number of rough edges that you
need to watch out for. The most important
thing to watch for is the size of the
sponsor. Read this article to find
out WHY.
•
"When
I sell my Old Property, what happens
to that basis?” “What about
the depreciation I already took?” “If
I fully depreciated my Old Property,
will doing a 1031 exchange let me ‘freshen
up’ my depreciation schedule?”
“If I buy the New Property for
$100,000, can I depreciate the whole
$100,000?”
• To
pay zero tax in an exchange you must
buy equal or up, and you must reinvest
all of the cash. But what happens if
you want or need some of the cash from
your exchange? What are the rules you
should be aware of?
• In
a recent article, I set out the requirements
for holding title to your property
in a 1031 exchange. That article pointed
out some of the obvious problems caused
by these rules. In this article I will
show you some solutions, or ways around
those problems, using disregarded entities.
• Gary
Gorman says a complex was
on the market for $15 million, but
was really worth about $12 million. "So
it has to appreciate 50% before those
people can break even..."
• One
of the basic requirements of a 1031
exchange is that the proceeds must
be held by an independent third party
the IRS calls a qualified intermediary.
Who is qualified to be an intermediary...?
• Boot
is the term that the IRS uses for the
part of an exchange that is taxable.
When a transaction overlaps the end
of the year, the year of taxability
becomes important....
Articles
and videos with basic information
about how 1031 exchanges work...
- - - - - - -
• NEW:
03.18.08- While
many real estate investors are
learning that a one-size-fits-all
tax-strategy doesn't exist, The
Wall Street Journal's Arden Dale
asks Gary Gorman what strategies
are in the cue as we approach the
2008 election season....
Articles in this series: Bare Bones Basics
of a 1031 exchange
- - - - - - -
• Section
1031 allows you to sell your
old investment property, buy
a new one,
and defer all of the capital
gains taxto
the new. This does three things
for you....
• Too
many people think that
profit, or gain,
is simply what you sold
your old property for minus
what you bought it for.
Most of the time that’s
not accurate...
• If
you know what you're doing,
you can make money in any
kind of investing. But for
the average investor, real
estate presents an especially
good choice.
• 1031
exchanges as we know them
have been around since
'91. Most people in real
estate have a good working
grasp of them,
but some have not heard
of 1031 exchanges...
• At
the offices of the 1031 Exchange Experts,
it astonishes us each time we hear
a potential client choose to go with
another company because of cheaper
fees. Arizona’s KTAR.com just
broke a story of a 1031 exchange
husband and wife team that, if convicted,
could face a combined 82 years in
prison....
• "One
of the questions that every sales associate
should ask the client in a listing
presentation is whether this is [his
or her] personal primary residence,”
says Tracey Wilson, a consultant
with The 1031 Exchange Experts,
a Denver-based intermediary firm....
•
In your 1031 exchange, you have 45 days
to create a list of properties you may
want to buy. If you put three properties
or less on this list, there are no price
limitations on these properties. However,
if you put more than three properties
on your list, there are very strict limitations.
Read this article to learn more about
these....
• You can roll the gain
from the sale of your old property over
to your new property without paying tax
by using Section 1031 of the Internal
Revenue Code. To accomplish this roll-over,
there are six easy steps you must follow....
There
are many articles by and about
The 1031 Exchange Experts.
See why they say we're
writing the book on
1031 exchanges...
Alexander
Haig's World Business
Review
Arizona
Journal of Real Estate
& Business
The
AZREIA Advantage
Bloomberg's
Wealth Manager
Bravo
Network
Broker/Agent
Magazine, Phoenix
Broker/Associate
Magazine, Denver
CASAS
de Colorado
CCIM
The Voice
Chicago
Real Estate News
Chicago
Sun-Times
CNN/Money
Colorado
Real Estate Journal
CREJ
Business Investors
Guide
Denver
Business Journal
El
Hispaño
Finance
and Commerce
Financial
Digest Real Estate
Journal
Florida
Real Estate Journal
Florida
Realtor®
Forbes
Lessengers
Business Connection
The
METROPOLITIAN Commercial
Mortgage Watch
MSNBC.com
Mundo
Ejecutivo
NABOR
News
Naples
Daily News
New
England Real Estate
Journal
New
Jersey / Pennsylvania
Real Estate Journal
New
York Real Estate Journal
The
New York Times
PAX-TV
Personal Real Estate
Investor Magazine
Platinum
Television Group
REJournal.com
Real
Estate Educators Journal
Southwest
Realtor
Summit
Daily News
The Travel Channel
Vail
Trail Real Estate
Journal
Real
Estate Journal - Wall
Street Journal Guide
to Property
Realty Times®
• Garrett Sutton on wsradio.com's
The Entrepreneur Magazine Legal Show interviews
Gary Gorman about how section 1031 helps
real estate investors. Listen in here...
