THE 1031 INSIDER FROM MARIE FLAVIN
HEY IF YOU ARE NOT ON THE INSIDE YOU ARE ON THE OUTSIDE SO GET THE INSIDE SCOOP ON 1031 EXCHANGE FROM THE MARIE FLAVIN = THE BEST IN THE BUSINESS!!
GORDON GEKKO WALL STREET MICHAEL DOUGLAS
COMMON 1031 MYTHS
There are countless myths and misconceptions about 1031 exchanges. What follows are a few of the myths heard over and over again in our offices. Here we attempt to set the record straight.
Myth #4 – You don’t need an exchange company for a simultaneous exchange. – Not true!
Taxpayers think if they can just sell and purchase the same day, in the same settlement office, they have an exchange without the expense of an exchange company. Hey, they never touched the money!
Unfortunately with this strategy, although they didn’t “touch” the money, they “controlled” the money by instructing the settlement agent to transfer the sale proceeds from one file to another. Control of funds is as fatal to this being a valid exchange as touching the cash would have been. They need an exchange company to document the two transactions as being part of an exchange and to provide the instruction to transfer between the two files.
Myth #5 – The Buyer (or Seller) has to cooperate. – Not really.
In a typical delayed exchange the Buyer of the relinquished property and the Seller of the replacement property do not have to do anything in order for the Taxpayer to have an exchange. The IRS rule is only that the Buyer/Seller be notified of the exchange, in writing, prior to closing. Notice only. They don’t have to cooperate. They don’t have to sign anything. They can’t stop the Taxpayer from proceeding with the exchange.
Marie C. Flavin, Esq.
Vice President
Northeast Regional Manager
(877) 230-1031 Toll Free
1031 INSIDER FROM MARIE FLAVIN. IF YOU ARE NOT ON THE INSIDE THEN YOU ARE ON THE OUTSIDE BUDDY!!
MYTH #6 – MARIE FLAVIN WEARS SKIRTS THAT ARE TOO SHORT WHEN SHE DOES HER 1031 LECTURES AND CLE TALKS=NOT REALLY! CAN A GIRL HELP IT IF SHE HAS GREAT LONG LEGS AND NASTY WOMEN IN THE ROOM GET WICKED JEALOUS?? I NEVER SAW ANY MEN COMPLAINING AND THE ROOM WAS FILLED WITH THEM!! THEY WERE HANGING ON HER EVERY WORD, RULES AND MYTHS AND I TAGGED ALONG TO MANEE A SEMINAR TO SELL TITLE!!! IN OTHER WORDS, IT IS HARDLY A HEN SESSION AND NO YOU CAN’T COME IT IS BUY SPECIAL INVITATION ONLEE THRU MEE AND I CAN COUNT ALL MEI FRIENDS ON MEI RIGHT HAND!! DON’T EVEN TRY TO CHALLENGE MEE OR I WILL SELL THE HOT AIR RIGHT ABOVE YOUR HEAD!!!! 🙂
Marie C. Flavin, Esq.
Vice President
Northeast Regional Manager
(877) 230-1031 Toll Free
GORDON GEKKO WALL STREET MICHAEL HEY IF YOU ARE NOT ON THE INSIDE YOU ARE ON THE OUTSIDE SO GET THE INSIDE SCOOP ON 1031 EXCHANGE FROM THE MARIE FLAVIN = THE BEST IN THE BUSINESS!
MICHAEL DOUGLAS IN WALL STREET
COMMON 1031 MYTHS
There are countless myths and misconceptions about 1031 exchanges. What follows are a few of the myths heard over and over again in our offices. Here we attempt to set the record straight.
Myth #4 – You don’t need an exchange company for a simultaneous exchange. – Not true!
Taxpayers think if they can just sell and purchase the same day, in the same settlement office, they have an exchange without the expense of an exchange company. Hey, they never touched the money!
Unfortunately with this strategy, although they didn’t “touch” the money, they “controlled” the money by instructing the settlement agent to transfer the sale proceeds from one file to another. Control of funds is as fatal to this being a valid exchange as touching the cash would have been. They need an exchange company to document the two transactions as being part of an exchange and to provide the instruction to transfer between the two files.
Myth #5 – The Buyer (or Seller) has to cooperate. – Not really.
In a typical delayed exchange the Buyer of the relinquished property and the Seller of the replacement property do not have to do anything in order for the Taxpayer to have an exchange. The IRS rule is only that the Buyer/Seller be notified of the exchange, in writing, prior to closing. Notice only. They don’t have to cooperate. They don’t have to sign anything. They can’t stop the Taxpayer from proceeding with the exchange.
PLANNING A HEAD FOR A SUCCESSFUL CHANGE OF HEART?
Marie C. Flavin, Esq.
Vice President
Northeast Regional Manager
(877) 230-1031 Toll Free
Successful IRC §1031 exchange transaction requires planning ahead and additional preparation, expertise and support. Your Qualified Intermediary can be very helpful in the early stages of preparing for your exchange by explaining the various types of exchanges, discussing the options that may minimize or eliminate any negative tax impact, handling the exchange documentation and safeguarding the exchange equity. Laying the proper groundwork before you enter into an exchange will avoid unnecessary obstacles and ensure a smooth transaction. It is always advisable that you seek tax and/or legal advice prior to starting an exchange, especially since the answers to the following questions may indicate that your exchange may be partially or fully taxable or that a more complicated structure may be required.
CHANGE OF HEART – 1031
? Is the property being sold (relinquished property) held as a business-use or investment property and do you intend to do the same with the replacement property?
? Is the title to the replacement property going to be held in the same manner as title is held on the relinquished property?
? Does the lender for the replacement property have any specific requirements for holding title that would cause problems with the exchange?
? Will part of the proceeds be used to pay personal debt?
? Will all members on title to the relinquished property be participating in the exchange or will additional parties be added to the title on the replacement property?
? Are you selling any of your property to or intending to buy property from a related party?
? Do you plan to offer seller financing on the sale of the relinquished property?
? Keep in mind the three basic rules to qualify for complete tax deferral:
1) use all proceeds from the relinquished property for purchasing the replacement property;
2) make sure the debt on the replacement property is equal to or greater than the debt on the relinquished property. (Exception: A reduction in debt can be offset with additional cash whereas increasing debt cannot offset a reduction in equity.) and
3) receive only “like-kind” replacement property.
? Be sure to identify possible replacement properties within the 45-day identification period and to acquire your replacement property within the 180-day exchange period.
? Make sure you do not dissolve partnerships or change the manner of holding title during the exchange because a change in your legal relationship with the property may jeopardize the exchange.
? If you find your replacement property before you sell your relinquished property a reverse exchange may be necessary. The IRS has provided guidance for reverse exchanges in Revenue Procedure 2000-37, but you should be aware that reverse exchanges are considered a far more complicated and expensive exchange variation because the qualified intermediary will hold title to either your relinquished or replacement property for up to 180 days pending the completion of the exchange.
? If you wish to do improvements to the replacement property before you acquire it then both the replacement and the planned improvements must be identified and the intermediary must hold title to the replacement property during the 180-day exchange period while the improvements are constructed. While the improvements do not have to be completed by the end of the exchange, the value of the land and completed construction should equal the net sales price of the relinquished property.