In the midst of unsettled financial times, we are all thinking of ways to maximize our investments and save money wherever we can. To provide some insight into one valuable real estate tool that can be used when selling a piece of property, we've invited the team from E xchange Authority to contribute to Raising The Roof this month.

IRC §1031 Exchange Basics

An exchange is a reciprocal transfer of one property for another. Its purpose is to postpone the payment of capital gain tax.

Like Kind
Property must be exchanged for "Like Kind" property. For example, real estate must be exchanged for other real estate. Real estate may not be exchanged for personal property of any kind. A car must be exchanged for another car and an airplane must be exchanged for an airplane. Cash, stocks and bonds, partnership interests and business goodwill are not Like Kind and do not qualify for an exchange.

Qualifying Use
In order to qualify for an exchange, the property given up in the exchange and the property acquired in the exchange must be held for a qualifying use. Property is held for a qualifying use if it is held primarily for business or rental purposes or primarily for appreciation. Property that is held primarily for personal use or primarily for sale is not qualifying property. Examples of qualifying property are a rental house, a cruse boat, a corporate airplane, and a race horse. Examples of non-qualifying property are the inventory in a hardware store, a sale boat used for personal pleasure, and taxpayer's principal residence or second home.

Exchange Requirement
The transaction must be an exchange of qualifying property for other qualifying Like Kind property and not a sale and a subsequent purchase. A sale and a purchase immediately thereafter will constitute a taxable event. An exchange will occur only when the seller's rights to receive the proceeds of the sale before the receipt of qualifying property are severely restricted.

Time Limits
The new property must be identified within a 45 day period and the exchanges must be completed within a 180 day period commencing on the date of sale of the old property. A shorter term may apply if the date of filing the taxpayer's return comes before the 180th day.

Get your yard ready for spring

If you're like me, you're really anxious to get outdoors after a winter of being cooped up inside. You're ready to put the snow shovels in the back of the garage, see leaves on the trees, and start enjoying your yard again. But before you run out to the garden center and start buying flowers, do some important preparation.

(Oh, and if you're not interested in yard work for its therapeutic benefits, remember that it can increase your property value by 15%. I don't know many people who are not interested in that!)

Clean, clean, clean
The wind has blown, the snow has fallen, and the frost has done a number on your plantings. Now is the time to clean the yard up. Pick up the sticks and any other debris that have fallen. Get rid of all those cruddy brown leaves - and be sure to rake the ones that are up against the house, fence, and shed.

Rake the lawn
Now is the time to get rid of thatch. It may sound technical, but raking the thatch is an easy task and fundamental to the health of your lawn. Thatch is a layer of grass roots, clippings, and debris that is just under the grass and difficult to see. Removing the thatch requires raking the lawn, with a little more oomph and a stiff-tined rake. There are even thatching attachments for lawn mowers if you want to go the automatic route.

Fertilize
If you're feeling like spring is the time for growth you're right. It's a good time to fertilize, but show some restraint. Too much fertilizer in the spring can be harmful. Determining the optimal fertilizing time depends on several factors. Check out one of the many lawn care websites if you are interested in more detail.

Kill the Weeds
Get rid of those pesky dandelions as quickly as possible with dandelion killer or by digging out the weeds at the root. There are several herbicides you can use.

Get your lawn mower ready
Don't wait until the grass is up to your ankles before you roll the lawn mower out of the shed for the first time this season. Try starting your lawn mower. If it starts right up, it is probably OK. However, you should tune up your lawn mower each spring. A hardware store may be able to do it, or you could do it yourself.

Now that ready for your beautiful spring lawn, remember that mowing it in the evening puts less stress on your lawn than mowing it in the heat of the sun.

Click here to read my "Mortgage Minute" in ForeclosuresMass.com's monthly newsletter. This month's topic: "Choosing The Right Mortgage Broker."

Westchester Mortgage simplifies the complex and often stressful process of finding the right loan program based on your financial goals and situation.

We provide unbiased advice regarding mortgage products offered by a wide variety of lenders. Our relationships with numerous banks and lenders allows us to select from thousands of programs to find the one that best meets your needs.

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