This is the third of three blog entries about the basics of Section 1031 exchanges. The first entry can be found here, Article #1, and the second entry is here: Article #2.
Quick review... the first hurdle for the standard exchange is that the properties must qualify. Second, you must establish your intent to exchange in writing prior to closing of the property you are relinquishing. Third, you must identify the property you intend to purchase using the guidelines allowed. Moving on to the final requirement...
#4 - Acquire the replacement property. Again going back to the date of closing of the property you sold, you must acquire (close on) your replacement property within 180 days following that date. At closing, the funds in your exchange account are paid directly from the exchange company to the closing agent.
This summarizes the most common type of exchange, referred to as a delayed exchange. Other exchange structures are possible, such as reverse exchanges (buy the new property before selling the old one), construction and improvement exchanges (build or improve the new property with proceeds from the sale of the old one), and exchanges of business assets (non-real-estate exchanges),
It is critical that exchange rules be followed carefully; to do otherwise will cause the exchange to fail. You should align yourself with a qualified exchange company that understands the intricacies of Section 1031 requirements. Employing a company that demonstrates knowledge of exchange regulations, is engaged in the exchange industry on a full-time basis, and supports the industry and the protection of consumers through membership in the Federation of Exchange Accommodators is the best way to ensure a successful result with your exchange.
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Please consider IOWA EQUITY EXCHANGE as your source for answers to your questions about Section 1031 like-kind tax-deferred exchanges. Contact us at your convenience for prompt, accurate information. Please think of us for your next exchange
Ken Tharp
800-805-1031 toll free
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2009 By Ken Tharp, All Rights Reserved. * Section 1031 Exchanges - The Basics (Article #3) * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
This is the second of three blog entries about the basics of Section 1031 exchanges. The first entry can be found here: Article #1
Quick review... the first hurdle for the standard exchange is that the properties must qualify
. Moving on...
#2 - Establish your intent to exchange. Now that you have determined that the property you are selling and a property you can envision buying will qualify, you must enter into a written agreement with your exchange company to establish your intent to exchange. This must be done prior to the closing of the sale of your property. At closing, as required by Section 1031 regulations, the proceeds are delivered directly to your exchange company to be held in trust during the exchange.
#3 - Identify the property to be purchased. After closing, you have 45 calendar days to identify the property to be purchased. I prefer to explain this rule by saying that you have all of the time before your old property sells and closes plus 45 days after the closing to make the identifications. Generally, you may identify three properties as potential replacement property and you may acquire one, two or all three of those properties. There are no restrictions on the values of the properties, either individually or in the aggregate. There are alternate rules of identification, but most exchangers use the Three-Property Rule.
(Article continued in Part 3.)
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Please see the next blog for additional information on Section 1031 basics.
Please consider IOWA EQUITY EXCHANGE as your source for answers to your questions about Section 1031 like-kind tax-deferred exchanges. Contact us at your convenience for prompt, accurate information. Please think of us for your next exchange.
Ken Tharp
800-805-1031 toll free
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2009 By Ken Tharp, All Rights Reserved. * Section 1031 Exchanges - The Basics (Article #2) * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
I was recently asked to write a short article for a local publication about the basics of Section 1031 exchanges. Over the time I've been here at activerain, my blog topics have covered a wide range of exchange-related topics, including the basics. However, it has been a long time since I've addressed that basic information. Writing the article caused me to realize that was the case, so this is an attempt to remedy that situation. With that in mind, here is the first of three blog entries having to do with the four basic hurdles for the standard 1031 exchange:
What if there were a way for a real estate investor or business owner to sell assets and reinvest the profits 
with absolutely no income tax liability whatsoever? A Section 1031 Exchange allows an investor or business owner to do just that. Believe it or not, this option has existed within the US tax code for well over 80 years,
Why exchange? There are many benefits, but the overriding one is the tax savings that allow more of your equity to be used in the new property, Example: You sell investment property and realize net proceeds of $100,000. Without an exchange, $30,000 of your proceeds could easily go to taxes, leaving only $70,000 for reinvestment. By employing an exchange, the entire $100,000 can be reinvested with no tax liability. Before you enter into an exchange, it is highly recommended that you consult with your tax or financial advisor to ensure that a 1031 exchange is right for you.
Between 1984 and 1991, many of the modern-day rules and regulations were written into the code. Let's examine the rules that apply to the common exchange.
#1 - The properties must quality. In IRS terms, they must be "like-kind." The easiest way to determine whether two pieces of real estate are like kind is to ask these two questions:
"Did I hold the property I am selling as an investment or use it in my business?" and "Do I intend to hold the property I will buy as an investment or use it in my business?" If you can answer, "Yes," to both of those questions, the properties qualify and they are like-kind. Yes, raw land can be exchanged for an apartment building. Rental houses can be exchanged for farmland. The possibilities are endless!
(Article continued in Part 2.)
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Please see the next two blogs for additional information on Section 1031 basics.
Please consider IOWA EQUITY EXCHANGE as your source for answers to your questions about Section 1031 like-kind tax-deferred exchanges. Contact us at your convenience for prompt, accurate information. Please think of us for your next exchange.
Ken Tharp
Ken Tharp, President
800-805-1031 toll free
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2009 By Ken Tharp, All Rights Reserved. * Section 1031 Exchanges - The Basics (Article #1) * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
In an article in the Des Moines Sunday Register, author Dan Piller investigates the value of farmland in Iowa based upon the results of a number of recent farm auctions. The conclusion? Farmland values are not rising at the rate they have over the past few years. Probably not a huge revelation to those of us who keep track of things, nor a huge surprise to those of you who don't. The current macro-economic conditions in this country and the world affect farm prices just as they touch virtually every other aspect of our lives.
However, the good news is that while prices may not be increasing at the breakneck speed they once did, 
they are not necessarily falling, either. The article quotes prominent Iowa State University economist and all-around farmland guru Michael Duffy as follows: "What we're probably seeing now is a plateauing, rather than a fallback in land prices. When people say prices are down, it probably is reliatve to what they expected two or three months ago" Another prominent farmland figure, Randy Hertz of Hertz Farm Management, puts it this way: "We're not seeing a pullback in land prices by any means, but the growth in land prices may have slowed."
While land owners feel the uncertainty that nearly all Americans feel right now, most are not concerned about a collapse such as the one that occurred in the 1980's. Land values rose at a hyper rate back then, too, but those purchases were oftenmade with bank loans. In a similar fashion to what is now occurring in the mortgage meltdown, farmers got upside-down on their farms when values dropped and were unable to generate the cash to make the payments. In today's farm economy, land owners are either purchasing new land with cash or with limited leverage, offering them a much greater probability of weathering future storms.
I welcome your comments on land values. Please let me know what you are thinking or wondering.
Please consider IOWA EQUITY EXCHANGE as your source for answers to your questions about Section 1031 like-kind tax-deferred exchanges. Contact us at your convenience for prompt, accurate information. Please think of us for your next exchange.
Ken Tharp
Ken Tharp, President
800-805-1031 toll free
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2008 By Ken Tharp, All Rights Reserved. * Farmland prices leveling off? * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
As Thanksgiving approaches, it's an interesting time in our country and the world. (Have you heard the saying, "May you live in interesting times?" I had always thought of that saying as a blessing, but it appears that it may have first started as a curse, at least if you can believe the Wikipedia entry: Wiki it.) At any rate, counting our blessings is never more common than at this time of the year. And even i
n this turbulent time, with our stock market imploding and taxpayer money flying around like confetti, it's still important to take stock of ourselves and give thanks. We still live in what I and the vast majority of its citizens consider to be the finest country in the world. We're not without our faults, but by and large we do things right.
Individuals in this country have the greatest opportunity for success that exists anywhere in the world. Regardless of what you think of his politics, it is a remarkable, almost unbelievable story that Barack Obama will be our next President. Where else in the world could someone with his background be democratically elected to the highest office in his country? (Please don't read that last sentence as anything but a compliment; I'm one of those who will not agree with most of his policies, but I recognize that he has accomplished a tremendous feat by being elected.)
Before I get too political, and at the risk of getting a little too syrupy, let me just say what I intended to say in this blog: we are a blessed people, and even in this downturn we must stand aside and recognize that. No one knows how bad things will get or if we're near or past the low point, but regardless of when things turn around we all have many things about which to be thankful. Please remember that and remember especially to hold your family close and tell them that you love them.
Happy Thanksgiving, everyone
Ken Tharp, President
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2008 By Ken Tharp, All Rights Reserved. * Thanksgiving Time * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
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Iowa Equity Exchange is a nationwide, trusted provider of Qualified Intermediary services for all types of Section 1031 tax-deferred exchanges. Free consultation about potential exchange transactions.
IOWA EQUITY EXCHANGE meets the needs of investors and business owners who desire to defer capital gain taxes on real estate transactions involving property held for investment or used in a business. We provide Qualified Intermediary services for tax-deferred exchanges throughout the United States. All exchange structures are supported and available through Iowa Equity Exchange: delayed exchanges, reverse exchanges, improvement/construction exchanges, business asset exchanges, and parking exchanges.
Ken Tharp established Iowa Equity Exchange to serve investors of all levels of expertise and experience. He has been a real estate investor himself since 1979. During the past thirty-plus years, Ken has been involved in virtually all areas of real estate – including sales, new construction, property management, and extensive renovations. After personal experience in a number of §1031 tax-deferred exchanges, it became a passion to expose this invaluable process to as many others as possible—thus was born Iowa Equity Exchange.
At Iowa Equity Exchange, our commitment is to provide investors, business owners, and real estate professionals with the highest level of expertise. Security is available for every dollar of your funds while they are held in trust. We pledge to maintain the integrity of every exchange.
A “Qualified Intermediary” has the very specific role of guiding the investor through a §1031 exchange. We inform the exchanger of exchange requirements, produce the necessary exchange documents, provide the critical time monitoring procedures required, and manage the investor’s funds while in our possession. We are not engaged in the practice of law or accounting; we urge all clients to discuss the matter of exchanging with their trusted advisers. We will be happy to join in those discussions if desired by the parties.
If you are interested in learning more about Section 1031 tax-deferred exchanges, there is a lot of information on our web site, www.iowaequityexchange.com.
IOWA EQUITY EXCHANGE. INTEGRITY. PRECISION. SECURITY.
Our Mission Statement: Iowa Equity Exchange exists to provide Qualified Intermediary services, but to do so with the utmost of integrity in our actions, precision in our documentation, and security for our clients’ funds.
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Iowa Equity Exchange Is a proud member of the Federation of Exchange Accommodators, the only trade association dedicated to the representation of professionals who conduct like-kind exchanges under Section 1031 of the Internal Revenue Code.
Members of the Federation of Exchange Accommodators must read and agree to abide by a rigorous Code of Ethics that can be found at the association's web site, www.1031.org.
In addition to the FEA, Ken Tharp is a contributing blogger to the American Apartment Owners Association, a member of the Iowa Commercial Real Estate Association, the Two Rivers Real Estate Investors Association, and the Iowa Landlord Association. Ken speaks frequently to real estate investor associations, real estate company meetings, various Boards of REALTORS®, and a variety of other organizations.
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Testimonials
"Excellent service, I would highly recommend for a 1031 exchange."
David Elgin, West Des Moines, IA, 2/4/09
“I am so glad I decided to work with you on these exchanges. I just want to let you know that everyone who has been involved and in contact with you has expressed excessively how nice you are to explain everything to them as the process progresses and how patient you have been with all of us who are ignorant of this business. You have made this so easy for everyone involved. Thank you from the depth of my heart. With all of my hysteria about the whole sale transaction, you have been the one smooth factor I could count on.”
Lora J, Coralville, IA 1/22/09
“Thanks for your prompt attention to all of our paperwork and your very clear instructions. This could have been complex and cumbersome, but you made it smooth and easy.”
Jean I, Olympia, WA 1/22/09
“Excellent work, I didn’t have to worry once. Ken made a very smooth transaction out of this and I’m very grateful. Will do business again with Iowa Equity Exchange.”
Frank S, Pleasant Hill, IA 12/5/08
“We work with Ken directly as our sole source for 1031 exchanges involving our clients. Ken's ability to give direction on where our clients need to head financially with property exchanges is an asset that we are very proud to offer at LandAndGame.com. The opportunity to work with Ken has been a real blessing for our business and will allow to us increase the bottom line for our clients investments across the board. In short, if you're an active investor in farm ground, hunting land with income, or duplexes and apartments, your time spent with Ken will pay dividends exponentially in your property portfolio."
Rod White, owner, LandandGame.com
“I first worked with Ken in 2007 after meeting him online. As a real estate agent and auctioneer serving my clients needs well is important to me. Ken spent hours on the phone with me taking the mystery out of 1031 equity exchanges and putting them in EASY to understand terms. I refer ALL of my 1031 exchange clients to Ken because he has taken EXCELLENT care of every client I have ever sent him. He is in my opinion the best in the business. He makes it so easy!”
Jason Smith, Land Specialist and Auctioneer, Loess Hills Land
"I contacted three 1031 exchange companies before selecting Iowa Equity Exchange for my 1031 exchange. Ken Tharp of Iowa Equity Exchange seemed to be the most knowledgeable person and was willing to answer all of the questions that I had about 1031 exchanges. The 1031 exchange went smoothly following the guidance provided by Ken Tharp.
Max Peterson, Stanton, Iowa, 6/8/08
“As a banker, I found your service to be very helpful.”
Paula Sears
“Being a new [real estate] agent, I’ve not dealt with 1031 exchanges yet. I found your presentation to be both informative and easy to understand.”
Rachelle Bryan
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Here is a screen shot of our advertising campaign currently appearing in Homes and Land magazine, Iowa Lawyer, the Iowa Society of CPAs publication, and a couple of other places.
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