1031 Exchange Accommodator Phone 619 991 1031 Email

1031 Exchange Accommodator Phone: 619 -991 -1031 Email: lance@Growth 1031. com

1031 EXCHANGES MARKETING PRICING TAX UPDATES

Are 1031 Exchanges Going Away NO!!!!!

What is A 1031 Exchange 'Section 1031‘ - A section of the U. S. Internal Revenue Code that allows investors to defer capital gains taxes on the exchange of like-kind properties held for business or investment purposes.

Example $ $ Purchase Sell Gain Tax $ 100 K $1, 000 $900 k $320 k

Basic Exchange Requirements 1. What Properties Qualify? 2. How Do I Defer All of My Taxes? 3. What Are The Important Timelines?

Rule 1: Qualification Property Qualifies For A 1031 Exchange If It Is Held For Business Or Investment Purposes Does Not Qualify HOME Qualify INTENT RENTAL

3 Unit Building Like Kind Office Space Intent 60 Unit Building Raw Land

RULE 2: HOW TO DEFER ALL TAXES 1) Reinvest all cash and 2) Purchase property Equal or Greater in value

Reinvest Your Net Sales Price After non recurring closing cost Sale Price $500, 000 Net Sales Price $450, 000

Common Issues 1. What if I don’t reinvest all my cash? 2. Do I have to replace my debt? 3. Can I buy multiple replacement properties?

Rule 3: Identification Once You Close Escrow You Have 45 Days To To Identify A New Purchase Property Must Be Done In Writing Close of Escrow Must Be Unambiguous

IDENTIFICATION 1. We provide a client identification form 1. Last resort, send an email with property address 1. You do not have to make an offer on a property

TWO WAYS TO IDENTIFY • 3 Property Rule • 200% Rule

3 PROPERTY RULE Up to 3 properties, without regard to valuation limits

200% RULE Unlimited number of properties, provided the aggregate fair market value does not exceed 200% of your sales price Purchase Sell $1, 000 $ 400, 000 Limit $2, 000 $ 400, 000

BUT WHAT IF • I want a different property after my 45 th day? • I want you to back date my ID date?

POSSIBLE SOLUTION • Communicate with your buyer • Presidential disaster declaration

EXCHANGE TIMELINE You Have 180 days to Complete the Entire Exchange Close of Escrow

REVIEW WHAT KIND OF PROPERTIES QUALIFY? PROPERTIES HELD FOR BUSINESS OR INVESTMENT PURPOSES HOW DO YOU DEFER ALL TAXES? REINVEST FOR EQUAL OR GREATER VALUE TIMELINE IDENTIFICATION: 45 DAYS EXCHANGE TIMELINE: 18 O DAYS

TAX UPDATES

MORTGAGE INTEREST RATE DEDUCTION The new law caps the limit on deductible mortgage debt at $750, 000

STATE AND LOCAL TAX DEDUCTIONS ARE CAPPED AT $10, 000 Previously, taxpayers could deduct payments made to state and local property, income, and sales taxes from their federal returns. The new law caps these deductions— which can be any combination of property, income, and sales taxes at $10, 000.

OTHER DEDUCTIONS CASUALTY LOSSES The law restricts the deduction to only losses attributable to a presidentially declared disaster. MOVING EXPENSES The law eliminates the deduction for all individuals except for members of the military.

HOMEOWNERS EXCLUSION Under the Homeowners Exclusion, home sellers can exclude up to $500, 000 worth of capital gains tax if they are married, or $250, 000 if they are single. To qualify for this benefit, home sellers must live in the house two out of the last 5 years. This has been Preserved.

AUDITS: RED FLAGS AND COMMON ISSUES • Incorrect information reported to IRS: 1099 -S, 1098, etc • Expenses / income out of line with industry norms • Personal use of rentals • Passive activity losses / Real Estate Professionals

AUDITS: RED FLAGS AND COMMON ISSUES • Real Estate Professional • Losses are only allowed to be used to offset other rental income unless qualifying as a real estate professional • Test: • 750 hours spent working on real estate; AND • More than ½ of all work hours during year spend on real estate • Active participation allows $25 K deduction below income thresholds

TAX LIENS ON PROPERTY • Franchise Tax Board – can issue for any amount of debt, very likely over $25, 000 • IRS – can issue for any amount of debt, guaranteed over $50, 000 • Equity in property is considered for any payment arrangements of tax • Liens can be lifted if IRS agrees to sale and has agreement with escrow for all excess funds to pay tax debt first

SALES BY FOREIGNERS • Withholding required • 10% IRS • 3. 3% FTB • Withholding is only a prepayment of tax; not a flat tax • Form 8288 -B / 592 -B can be filed to reduce withholding required

ESTATE TAX • Basic trust can avoid CA probate fees • For foreigners, only a $60 K exemption

QUESTIONS? • Josh Maxwell, CPA, JD, LLM Tax Attorney • Twitter • @HMLLPTax • @HMLLPGlobal • Josh@honemaxwell. com • www. honemaxwell. com • Se Habla Espanol, Paulina Roa, International Associate - paulina@honemaxwell. com • 我��中文普通� , ��系 : Aaron Li, Associate Attorney - aaron@honemaxwell. com

Complex Exchanges

REVERSE EXCHANGE Purchase First Purchase Before You Sell Second 1. Client can not own both properties at the same time 2. We become the buyer of the replacement property 3. Financing is difficult, so all cash purchase required

Marketing To Real Estate Investors

CREATE FARM LIST • 27 YEARS-DEPRECIATION • MORE THAN 5 PROPERTIES-THEY NEED TO DIVERSIFY • OWNERS THAT LIVE OUT OF TOWN

LET US BE YOUR RESOURCE

HOW MUCH DO YOU CHARGE? $650. 00 Relinquished Property $300 For Every Replacement Property

CLIENT SECURITY Bonded & Insured Background Check Personal Reference Check Federation of Exchange Accommodators Member

1031 Exchange Accommodator Phone: 619 -991 -1031 Email: lance@Growth 1031. com

1031 Exchange Solutions for Real Estate Professionals and their clients THE DST ADVANTAGE Insights into Section 1031 exchanges and Steven Delaware Statutory Trusts and the benefits for investors A Division of Kingsbarn Realty Capital de Barón Prescott, MBA, CF Vice President Kingsbarn Realty Capital 11622 El Camino Real, Suite 110 Del Mar, CA 92130 D: 858 -630 -0414 C: 619 -300 -6945 E: prescott@kingsbarn. com W: www. kingsbarn. com

1031 Exchange Solutions for Real Estate Professionals and their clients THE DST ADVANTAGE Insights into Section 1031 exchanges and Steven Delaware Statutory Trusts and the benefits for investors A Division of Kingsbarn Realty Capital de Barón Prescott, MBA, CF Vice President Kingsbarn Realty Capital 11622 El Camino Real, Suite 110 Del Mar, CA 92130 D: 858 -630 -0414 C: 619 -300 -6945 E: prescott@kingsbarn. com W: www. kingsbarn. com