1031 Exchange Lowdown

Beware of Fraudulent Intermediaries

Southwest Exchange Corp., a 17-year-old local company, with a sterling reputation, is now a cautionary tale for real estate investors. The firm and its three chief officers were summarily suspended by the state Division of Real Estate following complaints that the company was pocketing clients' money. Lvbusinesspress.com reports:

Marquis & Aurbach, a Las Vegas law firm that is representing jilted clients, estimates the losses at well over $83 million. Larry Wallace, a local mechanical engineer, is one of those left holding the bag. "They were supposed to hold our funds until we purchased another home," said Wallace. "But when we requested that the funds be transferred, there was nothing there."

Read more: Southwest Exchange closure exposes regulatory flaws

FBI Investigating 1031 Accomodator's Activities

The owners of three IRS 1031 Exchange accommodation companies entrusted with tens of millions of dollars of investors’ money abruptly closed their offices here recently without returning funds to investors. The FBI is currently evaluating complaints to determine if any federal laws were violated. Globest.com reports:

Looking beyond the immediate, Wright says the longer-term issue is what action government will take to minimize this type of thing from happening. Nevada is the only state that has any kind of registration requirement for exchange accommodators, and it requires only a $50,000 surety bond, which does nothing to protect investors.

Read more: 1031 Accommodator Closes; Funds in Question

1031 Exchange Purchases Drive Up Texas Land Prices

Land prices in Texas seem to be setting record after record. In 2005, the hike in prices stopped at a record $1,483 per acre. This effectively means land prices were up 16 percent from 2004 and 76 percent over 2000 prices. Nonagricultural demand continued to drive markets, and 2006 promises to be another banner year for Texas land markets.

Nonagricultural buyers who wish to avoid capital gain taxes are dominating the Texas real estate scene. The 1031 exchange allows an owner to convert one real estate investment into another without the gain being taxed. A growing number of Texas land market transactions involve buyers from outside Texas who want to benefit from Section 1031 exchange provisions. Ntxe-news.com reports:

Buyers buy now to avoid being priced out of the market as increasing demand drives prices up. These circumstances have led market participants to repeatedly note a dearth of quality listings and long lists of potential buyers.

Read more: Boom with a view

1031 Exchange Training with Advanced Techniques Launched

As the 1031 market continues to grow nationally, there is a substantial need for new standards of service, security and compliance to ensure that risks are minimized for individual investors, corporations, financial institutions and referring sources of 1031 transactions. Tips on how to generate new income streams from an existing client base are introduced through the 1031 Exchange Training program. In addition, the course also covers advanced exchanging techniques such as Tenant in Common interests and zero cash flow properties. The new advanced techniques course uses real life examples to teach readers how to comply with the IRS 1031 code while conducting exchanges. Course author John Falletti said,

1031 exchanges represent a widely untapped market. In fact, they are growing even as the real estate market stalls. This means that there is ample opportunity for anyone with the knowledge to utilize this market. I designed this course to provide a complete solution for dealing with 1031 exchanges.

1031 Exchange Drives Up Farmland Prices

It’s not only people in towns and cities that reap the benefits of 1031 exchange-related price hikes in property. A recent trend shows that the value of farmland is rising steadily. Wrex.com reports:

One factor driving up land costs is the 1031 Exchange. It's a tax incentive from the government that says if farmers make a profit from selling their land, they can trade it for land somewhere else without paying capitol gains.

Read more: Price of Farmland Goes Up; Farmers Still Find it Hard to Sell

Property exchange matchmakers to your help

--By Shyama Ramesh, Staff Writer

We are in a real estate slump nowadays and there’s ample proof of this. This Forbes article even points out the ten most slowing real estate markets in pictures. It also rates Ann Arbor, Mich. as the worst performing real estate market between the second quarter of 2005 and the second quarter of 2006, according to data from the OFHEO.    

No one knows more of this than realtors themselves. But two enterprising ones really found a new way to keep working in this market slump. Betty Greenspan and partner Nessa Adelson call themselves the "Swap Team," and have assembled a database of properties available for swaps and work out of Sarasota.

The Swap Team act as matchmakers looking to pair up owners who could be a match for a property exchange. However, given the complexities of the swap process, both are both continuing their traditional real estate activities while developing the exchange market.

The partners view themselves as third-party mediators who solve problems by bringing together two or more owners and assisting them in the mechanics of a swap. "The goal of the Swap Team is to assist real estate owners to use their properties ... residential or commercial, as a tool to acquire other properties that better fit their lifestyle needs or investment portfolio," Adelson said.

So, if you want to find someone to make a property exchange they are the ones to go to. Check out their Website for details. There are 75 properties listed on their Web site though not all lend themselves to tax-deferred 1031 exchanges under the IRS code.

DSB Associates buys Tesoro Village in a 1031 Exchange

Southern California retail developer, Westrust recently announced that it has sold off Tesoro Village – a 74,537-square-foot grocery store-anchored retail center. The store has been bought by Westlake Village-based DSB Associates for a sum of $31 million. The sale has been made under 1031 Exchange.

Faris Lee Investments brokered the sale. Its managing director Donald MacLellan stated that they had successfully obtained a nonrefundable deposit from the buyer and that too in a very short span of time. This was critical since the negotiated price had to be protected in view of raising interest rates. He added that the uncertainty of the capital market continues to threaten the investor’s return.

It may be noted that Westrust, is currently developing a massive center in Lake Forest and others near San Francisco. Tesoro Village which was built in 2005, was the only property owned by them. The Signal reports:

Built in 2005, Tesoro Village is part of the Tesoro del Valle residential development near Copper Hill Road. At the time of the sale, the retail center was fully leased by Albertsons, Bank of America, Starbucks, The UPS Store, Pick Up Stix, Great Clips, Red Brick Pizza and several other regional shop tenants.

Successful 1031 Exchange Transaction now made easy with a comprehensive Consumer Guide

A comprehensive guide to tax-free exchanging titled - 1031 Exchange Advantage Roadmap Guide, has recently been released by 1031 Exchange Advantage. 1031 Exchange Advantage is a leading Exchange Accommodator. This guide promises to educate the reader on nine major exchange opportunities. It also includes information pertaining to rules regarding home offices, oil & gas rights, and raw land.

It is note worthy that earlier these rules were generally used by large real estate investors. But now, with the release of this guide ordinary consumers can get their tax-savings related queries answered with ease. The guide is made available on the company’s website www.1031exchangeadvantage.com. David Greenberger, President of 1031 Exchange Advantage says that this guide will enable consumers to eliminate unnecessary complications and allow a smooth and profitable exchange transaction. He also added that people may not be aware that they in fact are sitting on significant gains. This guide will allow them to understand that tax laws allow them to sell and thereafter reinvest all the gains without paying taxes. Marketwire reports:

We designed the Roadmap to help trigger creative investment scenarios that can enhance the earning power of real estate investments," stated David Greenberger, President of 1031 Exchange Advantage.

New Consumer Guide to a Successful 1031 Exchange Transaction

1031 Exchange transactions are often considered as complex and difficult to understand. However, now you can take advantage of a new Consumer Guide released by 1031 Exchange Advantage. The guide will provide a roadmap for successful 1031 exchange transaction. The guide is known as "1031 Exchange Advantage Roadmap Guide.” This is a comprehensive guide to tax-free exchanging. The guide is currently available on the company's website. It outlines nine major exchange opportunities, including little known rules regarding home offices, oil and gas rights and raw land.

According to MarketWire -

The Roadmap includes a checklist for investors to plan and organize each transaction. "Record gains for the uninitiated means record taxes on capital gains. Anyone, who is sitting with significant gains may not be aware that the tax laws allow them to sell and reinvest all the gains without paying taxes when they qualify.

Five Star Bank Partners with Nationwide Exchange Services

Sacramento-based Five Star Bank collaborated with Nationwide Exchange Services (NES) to enhance its tax-deferred 1031 exchange business. NES is a Qualified Intermediary that provides an industry-leading suite of 1031 tax-deferred exchange products for individual investors through major US Corporations.

NES has the sophisticated business processes and controls that meet the requirements of the banking industry. NES provides Five Star Bank an extensive set of tax-deferred 1031 exchange products at the highest level of customer service with minimum costs. The products have full regulatory compliance. Five Star Bank will have access to a variety of marketing resources provided by NES.