"You can't make up anything anymore. The world itself is a satire. All you're doing is recording it."Art Buchwald
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Real Estate Clubs Hot Among Investors
Six or seven years ago, the stock market was booming, Internet companies that no one had ever heard of were valued at billions of dollars, and anyone and everyone was investing their money in tech stocks. Then, in 2000, the stock market crashed, the ...
Real Estate: Making a Perfect Sell
Each real estate agent or dealer comes up with salient options, prices and proposals. When you've decided to sell your home and have a fairly good idea of what you think it is worth. For selling home wisely, you schedule your meetings with few ...
Why Invest in Real Estate in Asheville, North Carolina?
Asheville, North Carolina, home of Vanderbilt's Biltmore Estate and the five star resort hotel, The Grove Park Inn, is now one of the most popular places to retire, relocate, or purchase a second home in the Eastern United States. In the early part of the ...
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One of the most powerful tools in a real estate investor's bag of tricks is the 1031 Exchange. When used properly it can defer the tax on capitals gains almost indefinitely.
A 1030 Exchange is really very simple. You don't actually have to trade one property for other... you just must use the gain from the sale of a income producing property to buy another income producing property. There are a few simple rules you must follow. One rule is that you have to complete the transaction with in a prescribed time period.
The other requirement of a 1031 Exchange is that you must never personally touch the money from the sale of the first property. Certain people and companies are in business to act as an "Intermediary" in exchanges. Their primary job is to collect and hold the funds from the buyer of the first property and deliver them to the seller of the property you are acquiring. And that's where the trouble starts.
In the past few years some Intermediaries have disappeared and the funds they were holding from many deals vanished along with them. Often the investor's losses amounted to from hundreds of thousands to millions of dollars.
Oh yes, there have been other problems. Some Intermediaries "co-mingle" the monies they are holding for exchangers. That means that all of their exchange client's money is held in one account under the Intermediary's name. If the Intermediary is sued for some reason all money in the account may be frozen. If the freeze lasts beyond the prescribed time limit (180 days) for exchanges the investors are out of luck. There are no extensions possible of the 180 day deadline. Now the investors must pay income tax on all those capital gains.
With the huge increase in real estate values in many areas recently, investors should be using 1031 Exchanges. There is just no better way to protect their profits and build net worth. But they must also protect those profits from careless intermediaries.
Make sure that your exchange funds are held in a separate exchange account that holds only your money and no one else's. That account must be separate not only from other client's monies, but also separate from the intermediary's assets.
Each of the accounts should have the client's name on it something like this: "The Exchange Kings, as intermediary for Barbie and Ken Investor". That account must have the investor's tax ID or social security number on the account. Now, no matter what goes wrong with the intermediary, your exchange funds will remain protected and accessible.
It's great to exchange a property for profit. Just don't exchange that profit for an unexpected loss.
About the author:
Mark Walters mentors real estate investors with free videos offered at http://www.CashFlowInstitute.com
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IRA |
Today's Real Estate Reality: How We Got HereIRAJim Ingersoll is a successful real estate entrepreneur, author of Investing Now and soon to be released “Cash Flow Now.” Jim resides in Richmond, VA and he enjoys speaking at events and coaching others to achieve their financial freedom.and more » |
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A Real Estate Deal That Spans The EarthNPRThe real estate market was booming. Bullis was visiting a friend in Carmel Valley on California's Central Coast, where homes can still sell for millions. "I was like, I'd like to retire out here. What's available? What's a nice piece of property?and more » |
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Real-Estate Crash Aids the Green MovementWall Street JournalBy LAURA KUSISTO The real-estate crash left pockets of the region's rural areas littered with the remnants of would-be golf courses, shopping centers and luxury subdivisions that never got off the ground. But the market swoon has yielded an unexpected ...and more » |
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