Bankers Exchange Services

Welcome to the August 3, 2008 edition of 1031 exchange.

KCLau presents How to Calculate Your Investment Portfolio Return? posted at KCLau’s Money Tips, saying, “About how to calculate your investment portfolio returns.”

Helen Anderson presents 5 Credit Card Fees You Probably Didn’t Know About posted at Bankaholic.

KCLau presents Average Monthly Household Income in 2007: Is it enough? posted at KCLau’s Money Tips, saying, “According to a survey done by the Statistic Department for the Economic Planning Unit, published in Personal Money Magazine June 2008 edition, a typical family in Malaysia earns only RM3686/month. How much this is worth and how much can be spent.”

Robert Phillips presents How to Create an Audio Product Practically for Free posted at CYBERCA$HOLOGY.

KCLau presents The Money Book: A CAP Guide to Managing Your Money posted at KCLau’s Money Tips, saying, “Published by Consumers Association of Penang (CAP), a run down on how to manage your money and a list of what the money book discusses.”

James Lee presents Massive Action… TO COMPLETION! posted at Online Business Freedom.

Robert Phillips presents 3 Simple Ways to Increase Blog Traffic posted at How to Create a DVD without Spending a Dime.

investing strategies

Mark Babineaux presents the-law-of-attraction posted at Where-is-my-success-i-don’t-know-what-to-look-for.

Value Seeker presents Stock Investment Resource: Stock Market Investing Tips – Don’t Overleverage posted at Stock Investing, saying, “Be careful with margin trading. If you take on too much
leverage, you may risk a margin call.”

Helen Anderson presents 3 Warnings Signs Your Bank May Fail posted at Bankaholic.

Larry Russell presents Financial Planning Reading List posted at Pasadena Financial Planner.

mortgage/financing

Raymond presents How Credit Scores Work And How Scores Are Calculated posted at Money Blue Book.

real estate market

Joe Manausa presents Housing Prices Decline Slightly – A Clear Picture Is Forming posted at Tallahassee Real Estate Blog, saying, “While there have been many articles written on the declining real estate market, most are filled with facts and figures that are difficult for the lay-person to follow. This article is filled with easy-to-understand graphs that demonstrate the modest decline in home prices.”

Joe Manausa presents Tallahassee Real Estate – Market Graphs Updated posted at Tallahassee Real Estate Blog, saying, “A compilation of real estate market graphs that shows different segments of the real estate market and how it is performing.”

transaction tips

Value Seeker presents Stock Investment Resource: Stock Market Investing Tips – Democrats and Offshore Drilling posted at Stock Investing, saying, “Author discusses the lunacy of the Democratic opposition to offshore drilling.”

Phil B. presents Stop Using Credit Cards « Phil for Humanity posted at Phil for Humanity, saying, “Save money by stop using credit cards.”

That concludes this edition. Submit your blog article to the next edition of 1031 exchange using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Thank you for viewing our blog, if you have any questions regarding 1031 Exchanges please give us a call at (877) 989-1031.

Disclaimer – The views expressed in these blogs do not necessarily reflect those of Bankers Exchange Services, Bay Commercial Bank or The 1031 Exchange Blog Carnival host.

Technorati tags: 1031 exchange, blog carnival.

If you are planning to sell your investment property and reinvest in other investment property then you should consider a 1031 tax deferred exchange. People that own rental and investment property have many reasons for wanting to sell it. They may own a single family home with a good rental history and significant appreciation and decide that they would like to move up and acquire an apartment building as part of a wealth building strategy. Or they may have relocated their personal residence and now find that it is difficult to manage a rental property in a different geographic location. Some people, particularly retirees, find that they no longer want to be landlords and exchange out of their investment property and reinvest in Tenant in Common structured transactions which are fully managed for them and qualify for 1031 exchange treatment.

The following is an example of a rental townhouse that the owners bought 10 years ago:

Original Purchase Price $199,000.00
Plus: Capital Improvements $100,000.00
Less: Accumulated Depreciation $30,000.00
Total Net Adjusted Basis $269,000.00

New contract sales price $450,000.00
Less: Net Adjusted Basis $269,000.00
Less: Selling expenses $31,500.00
Total Capital Gain $149,500.00

Depreciation Recapture @ 25% $7,500.00
Federal Capital Gains @ 15% $22,425.00
State Capital Gains (CA) @ 9% $13,455.00
TOTAL TAXES DUE $43,380.00

Contract Sales price $450,000.00
Less Cost of Sale (commission, etc.) $31,500.00
Less Loan Payoff $139,000.00
Proceeds from Sale $279,500.00
Less taxes due on Capital Gain $43,380.00
Net Proceeds after taxes $236,120.00

The above example illustrates, that this owner would benefit from doing an exchange since it is their intent to buy another piece of investment property and an exchange would allow the seller to defer the payment of the $43,380.00 in taxes and would increase the amount of proceeds to $279,500.00. This in turn allows for a larger down payment and increased buying power on the new investment property.

In order to fully defer the capital gains taxes when doing an exchange you will need to:

1. Buy replacement property that is equal or greater in value than the property being sold
2. Use all of your exchange equity to acquire the replacement property
3. Obtain a loan on the new property that is equal or greater than the loan balance on the property being sold

There are many variables that may be unique to your situation so always check with your tax advisor to determine whether or not a 1031 tax deferred exchange is necessary or appropriate. If you decide that you need to go forward with a 1031 exchange, please contact Bankers Exchange Services and ask to speak with one of our highly qualified exchange specialists.

Please contact Bankers Exchange Services directly with any questions – (877) 989-1031

With the real estate market in what seems like a downward spiral the need for doing a 1031 Exchange may seem less necessary. Recent events in the 1031 industry have made investors more leery of entering into an exchange transaction. There are many factors to consider when contemplating an exchange. The first thing to do is seek the advice of a tax professional; the second is to check with a financial planner to ensure your investment portfolio is not to heavily weighted in any one type of investment. Once an investor feels confident that a 1031 Exchange is the correct investment strategy they must find an accommodator they can trust with their funds.

Questions to ask a potential Qualified Intermediary: Are they bonded? Do they carry errors and omissions insurance? Do they segregate exchange funds into separate trust accounts that are federally insured? If the answer to all of these questions is YES that is a good indication you will be dealing with a reputable industry professional.

For help with any of the aforementioned topics or any other exchange related questions give Bankers Exchange Services a call, we have several extremely qualified individuals on staff that would be more than happy to walk you through an exchange transaction from beginning to end. We always want our clients to feel at ease when doing an exchange. Client satisfaction is our number one priority.

For more information please contact Bankers Exchange Services at (877) 989-1031