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Could a §1031 Exchange Help You? Get the Facts |
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.
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March's Home Value Improver |
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.
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With talks of a recession looming, banks
and lenders have been tightening up their
lending requirements - and not just with
people with some credit issues and high
loan-to-value loans. Even Prime borrowers -
those with excellent credit, excellent income
and low loan to values - are feeling the
pinch. Banks are really concerned about
values of homes.
Most deals aren't being
approved because the appraisals are being
cut back in value and banks are deciding to
refuse loans because they believe the owner
does not have enough equity. During
these uncertain times, having an advocate
who can provide the
right information for your unique situation
can be very helpful.
Please feel free to call or email anytime for
more information on any mortgage topic!
Best regards,
Debbie Siegel
President
Westchester Mortgage
P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.
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Click here to read
my "Mortgage Minute" in
ForeclosuresMass.com's monthly
newsletter. This month's topic: "Choosing
The Right Mortgage Broker."
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