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Timing, Part 2

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Timing, Part 2

A successful 1031 exchange requires quite a lot of learning and planning. There’s a mandatory prerequisite 45 day identification period and additional 135 day settlement time with the clock starting to tick the day you relinquish your property. These are just some of the hard and fast rules that parties must follow to stay on the good side of the IRS.

The timelines are inscribed in granite — and then after the horrific events of 9/11, the IRS issued a nationwide exception extending the 45 day identification rule and the settlement deadline for the entire United States. Since then, the IRS has expanded its exceptions for major natural disasters. Don’t dawdle.

Even with keeping track of compliance with mandatory timelines, the good news is you can write a contract any time before settlement for your replacement property. Sponsors have to consider timing issues for replacement property settlements. So get in line quickly.

Looking for guidance on when to file your tax return for your sale property, or advice on complex property deals? A 1031 exchange often involves more than one stakeholder as it moves toward completion, so having the right partners in your corner is a big plus.

Question 1:
Can I buy the new property before I sell and close on the (old) exchange property.

Answer:

Yes, you can – this kind of deal is called a reverse exchange; it’s complicated, and fees start at around $5,000. You’ll need a Qualified Intermediary who Is also an EAT to accomplish the reverse exchange.

Question 2:
Advise timing to complete a 1031 agreement

Answer:
Planning is of utmost importance for a successful 1031 exchange, and a Qualified Intermediary agreement is essential . The QI agreement is a standard that helps to legitimize a deal. The best time to hire a QI is when you have a valid contract for the property you are selling.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Marilee Hill has a good deal of experience in facilitating successful 1031 deals. As a broker licensed in multiple states, Hill has presided over a high volume of property exchanges and other real estate transactions, with a track record of establishing a high rate of success for clients.

As a broker with general securities (Series 7) license from FINRA and other key credentials and a background in real estate, Hill can help to bring clients through complex and sophisticated deals, such as deals involving more than one parcel, or TICs, or advanced real estate trading situations.

Ask Marilee Hill about what you can do with a 1031 exchange in today’s market.

Role of Marilee Hill, Registered Representative

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Role of Marilee Hill, Registered Representative

Since 1999, Marilee Hill has been working with clients to help them understand 1031 exchange practices and the context in which these real estate deals qualify and conclude successfully. Banking on her experience with sales and leasing, Hill helps those who want to pursue these deals to develop a better picture of how they work.

In her prior role as a broker, Hill learned a lot about what truthfulness and transparency offer in the common real estate deal – and other deals that seem rather unique! When you get involved in any complex real estate deal, you want agents and brokers who can work with people. Ask Marilee Hill for advice on 1031 exchange deals and more.

Ask Marilee Hill about what you can do with a 1031 exchange

Question 1:
Hi Marilee\nI am from San Diego My name is Chit, I am from Mira Mesa interested to sell my condo rental to an investor, using 1031 exchange, Please advise me as to your fees and send me an article that I can start with . \n\n.Maybe it will sell for $325 K , I have a existing loan of $220K. Thank you!..

Answer:
Hi - in order to facilitate one of these deals, you will need a professional qualified intermediary who does not have a conflict of interest. You'll want to go to settlement with a QI who can present papers there.

My role in the process is to help you to find replacement properties for your exchange. These properties are sold on a private placement memorandum (PPM) and regulated by Reg D of the Security Act of 1933. In order to make one of these deals, you must be an accredited investor and have net worth of $1 million or more, and that does not include your primary residence.

Question 2:
we have 2 rental properties we want to sell both and buy one rental in Florida Can you help my wife and I in doing this or recommend someone in our area who can help us.

Answer:
As a registered representative with GSRE series 7, I can help you to find properties in your destination area. However, you'll need someone locally to help you sell your rental properties. You also need a qualified intermediary as mentioned above.

The Role of the QI, Part 2

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

The Role of the QI

It's important to have a qualified intermediary when you're trying to do any delayed exchange – if you go to settlement and don't have documentation from the QI, the deal goes through and you have you have forfeited the exchange.

So what else is disqualifying? Your qualified intermediary must be without a conflict of interest. This means avoiding using family members, as well as professionals who do other work for you such as your regular lawyer or CPA. Treas. Reg. §1.1031(k)-1(g)(4) iii specifically addresses the QI’s conflict of interest.

Question 1:
Can I complete the exchange myself without a facilitator?\nWhat is the facilitator’s fee?

Answer:
For a delayed 1031 exchange, you must always have a qualified intermediary in every case. The qualified intermediary will charge between $600 and $1000, which is small change when it comes to facilitating this type of deal. It's a good idea to have a qualified intermediary on hand and use this person as a resource going toward a successful 1031 exchange deal.

Question 2:
I am looking for someone who is familiar with 1031 delay exchange to review my exchange documents. Do you provide that kind of service?\nGee

Answer:
Unfortunately, I cannot act in the role of qualified intermediary. You must find a professional to serve as QI, and that person can't have a conflict of interest – he/she cannot be your lawyer or anyone with prior ties to you. I can help you to find replacement properties.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

If you want a real estate professional with a wealth of experience to help you understand more about 1031 exchanges, Marilee Hill has a good deal of experience in this field. After running her own apartments and leasing and managing, Hill moved into a broker role.

Hill understands that a lot of the real estate process is fundamentally about people. Dealing with sponsors and customers and other agents and brokers, Hill always puts other people first. Her motto says it all: “my clients’ success is my success.”

Ask Marilee Hill about what you can do with a 1031 exchange to boost your real estate income.

Exchange Basics, Part 2

 

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Exchange Basics, Part 2

Back in the old days, many deals were cash only. But now, 1031 exchanges have become more sophisticated in multiple ways. The real professionals have been involved in the TIC and DST exchange markets. We have clients all over the country, access to the experts with knowledge in esoteric abstract 1031 issues and we are able to make our deals work according to IRS regulations.

One of the central premises for a 1031 exchange is that investors are going to save taxes. Sound simple - when you want to take out a chunk of cash and have a high basis? Think again. Then there is confusion - the sale of your primary residence is Section 121, not 1031, except where you have a rental unit or a rental on your primary residence. Are you doing like kind to like kind? — a pro knows how to check and provide a solid path forward.

A ‘like kind’ property refers to real property including what individual states define as real property such as timber and mineral rights from which you can facilitate 1031 exchanges. Geographically the definition is limiting to U. S. , U.S. Virgins Islands and Guam. If you own a property outside of the U.S. you have to exchange that property with another foreign property — France to Mexico, etc.

Question 1:
I have a single family home in Palmdale, CA which we have been renting since 1988. I want to exchange it with a commercial property in the North Dallas area where I now resides. What is the best way to go about it using this 1031 exchange?

Answer:
1. Hire a Qualified Intermediary
2. Go to settlement with the QI’s papers in hand
3. Use cash and debt on an equal basis
4. Put the money into the new property
5. Add debt or cash to the deal

Question 2:
I have a single house I've rented for 12 years which is paid off. I'm going to sale the house but would like to buy another rental house in another city. I bought this house in 1990. Not sure how a 1031 works.\nThank you, Mary

Answer:
Two United States properties are like kind to each other. Engage a Qualified Intermediary before you go forward with the details of a 1031 exchange deal.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Although the 1031 exchange is a basic concept, a lot of these deals raise significant questions – whether you want to know about what constitutes a complete exchange, the role of cash versus data, or how you deal with deductible expenses, ask Marilee Hill.

Marilee Hill has the experience to help you with a 1031 exchange. She came into the exchange field in 1999 having already managed her own apartments and learned a lot about with a real estate process.

Please contact Marilee Hill for your next 1031 Exchange strategy.

Like Kind Exchange - Asset Class, Part 2

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Like Kind Exchange - Asset Class, Part 2

Many people have a question when they hear about a 1031 exchange for the first time – they're asking about what constitutes a ‘like kind’ property.

A ‘like kind’ property refers to real property including what individual states define as real property such as timber and mineral rights from which you can facilitate 1031 exchanges. Geographically the definition is limiting to U. S. , U.S. Virgins Islands and Guam. If you own a property outside of the U.S. you have to exchange that property with another foreign property — France to Mexico, etc.

Question 1:
Hi! I have a couple questions. I have 2 single family rentals in Denver Colorado. 1) Can I exchange the TWO of them TOGETHER for ONE rental in California (since property there is so much more expensive). 2) can the rental in California be a condo or must it also be a single family residence? Susan

Answer:
In certain cases, you can exchange two properties for one. Various 1031 guidelines apply, but your condo being real property, you may be able to combine the properties to make the deal.

Question 2:
I personally own my doctors office in a coop building (shares) I rent it to my medical corporatiion, I am selling the coop and want to by a condominium apartment for the purpose of renting it. Is this like kind exchange?

Answer:
In New York, these types of deals can often pass as like kind. Look at the specific details of the co-op building’s setup and whether it represents like kind with a condominium apartment.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Want the best trusted 1031 exchange advice? Call Marilee Hill. She has experience in property management and real estate – understanding all of the alphabet soup involved in the real estate process, such as Delaware Statutory Trusts and other obscure elements of 1031 exchanges.

She also knows that real estate is, at its root, based on people. Let Marilee Hill help you to deal with sponsors and brokers and other stakeholders in a personable and professional manner.

Please contact Marilee Hill for your next 1031 Exchange strategy.

Like Kind Exchange – Location, Part 2



The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Like Kind Exchange – Location

Our world keeps growing and expanding and getting more complex through the power of technology. Populations are more mobile now than they used to be, and we can move data and goods at speeds that you couldn’t imagine just a few decades ago.

On the other hand, a property that you bought a few years ago at 555 North Main St. in your hometown is still at the same address, in the same state. Real estate is, in that way, static. It’s going to be the same asset day to day and year to year, barring any major catastrophes or a spike in the housing

market.

Although your property will stay the same, your needs may change. You may be moving out of state, or want a family member to take care of your property. Our lives change. The good news is: there is no 1031 ambiguity in addressing this kind of scenario. The 1031 exchange has hard rules, and with the right guidance, you can set up the 1031 that works for you.

Question 1:
For investment property in NJ, want to sell and purchase another investment property in TX.

Answer:

This type of 1031 exchange deal is done every day of the week.

All U. S. property is like kind. All foreign property is like kind to other foreign property. SO if you want to sell in New Jersey and buy in Texas, you’re on solid ground. Now, if you wanted to sell in New Jersey and buy in Barcelona, Spain, that’s another story.

Question 2:
information on internal rev code 1031, like kind exchange. can investment property be like kind exchange from one state to another…

Answer:
Any property in the United States is like kind to any other location in the United States, U.S. Virgin Islands and Guam. It is not like kind to another country. As in the example above – if it’s not a U.S. property, it’s like kind to another “foreign” property outside of U.S. jurisdiction.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Turn to Marilee Hill, an experienced real estate professional, for help with 1031 deals and other real estate guidance. Hill entered into the securitized 1031 exchange field in 1999 and used her previous experience as a property manager to get a broader view of real estate markets in the U.S. and elsewhere.

Marilee always says “My clients' success is my success”. She wants clients to succeed, and she knows what this entails. It means getting everyone, including the IRS, on the same page. It means building a 1031 exchange on a firm foundation so testing it doesn’t lead it to wash away.

Please contact Marilee Hill for your next 1031 Exchange strategy.

Reasons for a 1031 Exchange, Part 2



The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Reasons for a 1031 Exchange

There are various reasons for selling a property and exchanging it with a 1031. Maybe the sellers are selling a mature property and diversifying, or evaluating how the longterm goals of multiple owners have changed. Maybe they are intent on increasing cash flow, or doing necessary estate planning, or moving their households to a different location – in any case it helps to know the rules and do a 1031 exchange the right way. Before the IRS rulings in 1992 clarifying “like kind” for all asset classes of real property, (from townhouses to retail centers, and office condominiums to apartment complexes,) only investors absorbing large legal bills or doing very small exchanges could take advantage of the 1031 exchange. The 1992 changes in IRS handling, along with IRS rulings in 2002 blessing the TIC structure and, in 2004, the DST structure, make a wider spectrum of 1031 exchanges viable.

Now, investors can sell and exchange and have all their profits working for them, instead of the taking out 25% tax on depreciation, plus 15% or 20% and 3.8% (from ACA implementation) and capital gains tax. That’s not to mention the bite that state tax can also take out of your yield apple – especially if you are in a state with income tax rates like California. A perfectly done 1031 exchange eliminates the tax burden and maximize profit.

Question 1:
We own a commercial property with a partner. We put the building for sale it under contract. We our portion of the proseeds my husband and want to buy another commercial building to move our real estate businesse there. We rent to our self in the building we are selling. Can we do a 1031 exchange?

Answer:

If you own the property under your own personal names and not in a LLC or Partnership, you will be able to 1031 your sale proceeds. If not, you cannot do a 1031. Renting from yourself does not make a difference, because you are using the property for commercial purposes, and not as your primary residence.

Question 2:
What’s a,safecyet lucrative exchange product or opportunity

Answer:
So much depends on the exchanger’s perspective; there are as many answers as exchangers. In general, though, a safe transaction is one that you have studied, along with professional guidance, and established clear knowledge on likely outcomes. A 1031 exchange is one of those many areas where “due diligence” is important.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Marilee Hill is a real estate professional who entered into the securitized 1031 exchange field in 1999, already armed with a lot of experience dealing with different kinds of real estate, including rentals and family homes. Marilee has been a real estate broker in multiple jurisdictions. She understands first-hand the human side of the business, and what it really takes to make a deal work. With kind, cheerful professionalism, she is someone you want on your side for a successful 1031 exchange.

Contact Marilee Hill about your next 1031 exchange deal.