Instant equity Exchange

Instant equity Exchange

I just listened to one of Dean's archives on equity exchange.

Has anybody tried that strategy yet?
If so, Would you please give a brief explanation.



Please send a link to the

Please send a link to the archive for "Dean's archives on equity exchange" ?



Commonly called 1031 EXCHANGE:


1031: Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment. A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of "like-kind" while deferring the payment of federal income taxes and some state taxes on the transaction. The exchanger must identify the property to be purchased (generally called the target property or replacement property) with in 45 days following the sale of the relinquished property and close transaction with in 180 days.

Deferred exchanges are also known as "delayed" or "Starker" exchanges. A standard deferred exchange typically involves one relinquished property and one replacement property. During the exchange process, it will be necessary for the exchanger to assign interest in the relinquished property and the sales contract to Equity 1031, LLC. We will accept the proceeds of the sale of the relinquished property and deposit the proceeds into a fully insured account at a financial institution on the exchanger's behalf. This is sometimes referred to as phase 1 of the exchange.

Reverse exchanges are also known as "parking" exchanges. One of the key differences between a reverse exchange and a deferred exchange is the use of an exchange accommodator titleholder (EAT). A qualified exchange accommodator agreement (QEAA) must be established. The exchanger may acquire the replacement property first and "park" it with the EAT. Alternatively, the exchanger may first park the relinquished property with the EAT. A reverse exchange is more complicated than a deferred exchange and requires careful planning and coordination. The fee for a reverse exchange is therefore more expensive than the fee for a deferred exchange.

If you are interested in doing a reverse exchange, I suggests prospective clients to contact own accountants or legal advisor's to seek advice as to the type of exchange that may be best for the situations.


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I'm posting cactusbob's answer to me about exchanges here.

My question:
The exchanges that you mention in you bio, are those 1031 exchanges? We don't really have much information in the forums on that subject, and many of us are interested to know more.

His answer:
Thanks for the note, Rina. The Calif exchanges were concurrent escrow closings (3-way exchanges, pre-Starker), and the ones after we moved to WA were 1031's, with First American Title acting as the facilitator. They were very professional and reasonable, and they do the entire country. I would heartily recommend them as a 1031 facilitator.

Of course, the purpose of "doing a 1031" is to defer capital gains income taxes, so it is worthwhile only if you are about to realize a sizable gain.

Besides having to pay a fee ($500-$1,000) to the facilitator, you also have to file an IRS Form 8824 for that year. So there needs to be a nice gain for it to be worthwhile, otherwise you can just pay the capital gains tax and skip the facilitator and form 8824. But lots of the gains that have been made doing these real estate deals certainly qualify as nice.

As an estate planning expert has said, you never need to pay capital gains taxes: exchange properties rather than sell them, refinance if you need money, and let the properties pass to your heirs (avoid probate by using a Revocable Living Trust) and the basis gets adjusted so the heirs don't pay the capital gain tax.

Hope that gives you some info you can use; you have my permission to share it any way you choose on this site. I'm just learning how it's structured.



"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)

"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11

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