The primary objective of most Section 1031 exchanges is to move an investment from one property to another without incurring a tax liability. In other words, take your money out of this property and put it into that property and pay no capital gain tax. By following the rules and regulations of Section 1031 properly, an investor can accomplish that without having a capital gain tax bill.
Occasionally someone we work with will ask a question similar to this: “How about if I refinance my property and pull cash out, then do an exchange into another property? Borrowed cash is tax-free, right?” The answer is yes, most of the time. However, if an investor refinances close to the date of a sale and then proceeds into an exchange, the IRS would likely consider the refinance proceeds as cash taken out of the exchange (therefore being taxable) unless there was some fairly clear-cut business reason for the refinance outside of simply wanting tax-free cash.
The same goes for a refinance shortly after the purchase of the replacement property. Absent a definable purpose for the refinance, the IRS would quite possibly consider the refinance proceeds as boot, and again, expect taxes to be paid on that cash.
The essence of the matter is that the property owner should be able to substantiate an economic or business purpose for the refinance separate from merely getting around Section 1031 rules to pull out cash. The more time between the refinance and the sale (in the case of a relinquished property) or the purchase and a refinance (in the case of a replacement property), the better.
As always, it is critical to discuss matters such as this with one’s tax advisor for specific advice for your circumstances and plans. Please feel free to ask us any questions on this topic as well as any other exchange-related topics.
Ken Tharp
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. * What about Refinancing Before or After an Exchange? *
If you are in the western Iowa/eastern Nebraska area, please consider attending the West Central Iowa Board of Realtors meeting at 6:00 PM on Monday, September 8, 2008 at the Harlan, Iowa Golf and Country Club. The board has asked me to speak on the basics of Section 1031 exchanges. You have my promise that it won’t go on too long and I’ll cover the essentials in a no-nonsense, plain English manner. Non-members are welcome and they pay the same price as the members!
If you are interested, please get in touch with me in order to make a reservation and be sure that there’s a place for you. I hope to see you there!
Ken Tharp
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. * West Central Iowa Board of Realtors Meeting *
On April 17, 2008, the Iowa Landlord Association will sponsor the 2008 Spring Educational Seminar and Trade Show at the downtown Holiday Inn, 1050 6th Avenue, in Des Moines. The event starts at 8:00 A.M. and runs until 
3:30 P.M. The speakers and their subjects are as follows:
Iowa Equity Exchange will be present at the event as a vendor/exhibitor. Please stop by our table and register to win a $25.00 gift card to Best Buy! It promises to be a fun- and fact-filled day! More information can be obtained on the ILA web site.
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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
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. * Iowa Landlord Association Event on 4/17/08 * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
I have been honored with an invitation to speak at the Two Rivers Real Estate Investor’s Association monthly meeting on Wednesday, March 19, 2008. The meeting will be held at the Agribusiness of Iowa Building, 900 Des Moines Street, Des Moines, IA, from 6:00 pm to 7:30 pm. Click for map.
There is a nominal fee of $10.00 to attend the meeting (goes to the association, not me!), or you can elect to pay $20.00 that will cover you for the entire quarter.
We’re 
going to talk about the basics of Section 1031 tax-deferred like-kind exchanges, plus we’ll get into some more advanced areas, too. Andrew Lietzow, Grand Pubah of the association, has specifically aske
d me to discuss reverse exchanges. In addition, I’m going to get out my buy-and-hold versus buy-and-exchange spreadsheet and see if I can get some input numbers from the attendees to crunch. Andrew has also asked me to consider singing my alma mater’s fight song; if I do so, it will take place at the very end of the meeting; any earlier and it would drive everyone away.
There will be take-home materials distributed, and a good time will be had by all.
Come visit, learn about tax-deferred exchanges, and see why IOWA EQUITY EXCHANGE is the company you should use for your next Section 1031 tax-deferred exchange.
Ken Tharp
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. * Two Rivers Real Estate Investor’s Association Meeting * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
Midwest farmland prices increased an average of 16% in 2007, according to the Chicago Federal Reserve Bank’s annual survey of agricultural lenders. The 7th Federal Reserve District that is based in Chicago consists of all of Iowa and half or more of four other states: Michigan, Wisconsin
, Indiana, and Illinois.
According to the 265 surveys that were returned by agricultural bankers in this district, farmland prices during the last quarter of 2007 rose 6 percent.
Iowa farmland was consistent with that average, also rising 6% during the quarter. Iowa is divided into five areas by the Chicago Federal Reserve Bank for reporting purposes. The area encompassing most of north and west-central Iowa reported a 24 percent gain over calendar 2007. The area of western Iowa adjoining South Dakota and Nebraska, from the Minnesota border to the Missouri border, increased 20 percent over the same time frame. Rounding out the five zones are the three zones made up of south-central, eastern, and northeastern Iowa at 19 percent, 15 percent and 14 percent.
Section 1031 exchanges are slipping out of the blame for higher land values, and with good reason. Cash corn prices in December were 25 percent higher than December of 2006, and cash soybean prices showed an even greater jump at 62 percent higher. Ethanol, bio-diesel, and increased demand from China and India are the leading blame-getters these days, not tax-deferred exchanges.
Fifty-six percent of the survey respondents (remember, these are agricultural lenders) said that they expect farmland prices to continue their pace of increase into the first quarter of 2008. A scant 2 percent expect land values to decrease, and 42 percent anticipate prices to remain the same from January to March. Since we are already into March, it looks like a pretty safe bet that we are not going to see that decrease the wacky 2 percent expected.
Ken Tharp
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. * Midwest Farmland Prices Increased an Average of 16% in 2007 * 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
Our Current Advertising Campaign
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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