http://www.selectbrokersrealty.com
This is a little off the subject of Real Estate however we all need to monitor our time...........
Time is truly our most precious resource. The famous writer, Jean-Louis Servan-Schreiber, wrote, "Unlike other resources, time cannot be bought or sold, borrowed or stolen, stocked up or saved, manufactured, reproduced, or modified. All we can do is make use of it. And whether we use it or not, it nevertheless slips away." It truly is how we use it to our advantage that makes the difference. How effectively are you using the time you are given?
Friday, August 29, 2008
Thursday, August 28, 2008
Understanding Capital Gains in Real Estate
http://www.selectbrokersrealty.com
When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home’s adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
You have lived in the home as your principal residence for two out of the last five years.
You have not sold or exchanged another home during the two years preceding the sale.
You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home’s adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
You have lived in the home as your principal residence for two out of the last five years.
You have not sold or exchanged another home during the two years preceding the sale.
You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
Tuesday, August 26, 2008
Hoschton May Make National News
http://www.selectbrokersrealty.com
A all day workshop to make scarecrows will be held at the Hoschton Depot Wednesday Aug. 27 starting at 8am you are encouraged to attend. If you have any questions or need directions email me - ray@selectbrokersrealty.com
A reporter named Juanita Cousins will be at the scarecrow workshop to follow up on an article written earlier about our project. She is with the Associated Press which is a major network source of newspapers, radio and TV. Her article will be available to use by any of the news media across the country. The Associated Press is where ABC, NBC, CBS, & TBS get a lot of their stories.
A all day workshop to make scarecrows will be held at the Hoschton Depot Wednesday Aug. 27 starting at 8am you are encouraged to attend. If you have any questions or need directions email me - ray@selectbrokersrealty.com
A reporter named Juanita Cousins will be at the scarecrow workshop to follow up on an article written earlier about our project. She is with the Associated Press which is a major network source of newspapers, radio and TV. Her article will be available to use by any of the news media across the country. The Associated Press is where ABC, NBC, CBS, & TBS get a lot of their stories.
Monday, August 25, 2008
VA Raises Loan Cap to $729,000
http://www.selectbrokersrealty.com
The Department of Veterans Affairs (VA) is raising ceilings on its no-downpayment home loans from the current $417,000 to as much as $729,000.
The increases are effective immediately under legislation recently enacted with President Bush signing the Housing and Economic Recovery Act of 2008.
That law also improved VA's Specially Adapted Housing Program. It raises primary grants from $50,000 to $60,000 toward constructing a new home or modifying an existing home to meet adaptive needs of veterans or active duty servicemembers with certain service-connected disabilities.
One new feature is a provision in the law that will assist burn victims. It will allow veterans with certain service-connected disabilities resulting from severe burns to receive the adaptive housing grants. The new law also makes future increases in ceilings on the Specially Adapted Housing Program automatic.
The increased limits in the general home loan program for all veterans' home purchases or construction will be based on local housing costs, tied to the similar locality adjustments of the Federal Home Loan Mortgage Corp., Freddie Mac.
VA home loans are available for veterans to purchase or construct single-family homes, and to purchase condominiums or cooperative apartments. There are about 2.3 million existing VA home loans, more than 90 percent made with no down payment.
The Department of Veterans Affairs (VA) is raising ceilings on its no-downpayment home loans from the current $417,000 to as much as $729,000.
The increases are effective immediately under legislation recently enacted with President Bush signing the Housing and Economic Recovery Act of 2008.
That law also improved VA's Specially Adapted Housing Program. It raises primary grants from $50,000 to $60,000 toward constructing a new home or modifying an existing home to meet adaptive needs of veterans or active duty servicemembers with certain service-connected disabilities.
One new feature is a provision in the law that will assist burn victims. It will allow veterans with certain service-connected disabilities resulting from severe burns to receive the adaptive housing grants. The new law also makes future increases in ceilings on the Specially Adapted Housing Program automatic.
The increased limits in the general home loan program for all veterans' home purchases or construction will be based on local housing costs, tied to the similar locality adjustments of the Federal Home Loan Mortgage Corp., Freddie Mac.
VA home loans are available for veterans to purchase or construct single-family homes, and to purchase condominiums or cooperative apartments. There are about 2.3 million existing VA home loans, more than 90 percent made with no down payment.
Thursday, August 21, 2008
Should You Buy Or Rent
http://www.selectbrokersrealty.com
Buying a home is a rewarding experience. You derive a great deal of personal satisfaction from owning a home. Homeownership allows you to build up your personal net worth over time. Moreover, long-term increases in housing prices nationwide makes homeownership a relatively attractive investment.
In some cases, renting may be a more attractive option. For example, if you plan to move in a year or two, you are unlikely to recover the closing costs you pay when you buy a home. In addition, finding a home to buy generally takes more time than looking for an apartment to rent.
In addition to building up equity over time, owning a home offers significant tax breaks. The interest expense that you pay on up to $1 million in home mortgage debt ($500,000 if you are married and filing a separate return) is tax-deductible.
Your tax savings from the mortgage interest tax deduction are greatest in the early years of a mortgage loan. For example, on a 7%, 30-year fixed rate mortgage loan of $100,000, you pay $6,968 in interest the first year of the loan. If you are in the 25% income tax bracket, your tax savings are $1,742. In Year 16 of the loan, you pay $5,090 in interest, which saves you $1,273 in taxes. In Year 24 of the loan, you pay $2,926 in interest, which saves you $732 in taxes.
When you sell your home, you can exclude up to $500,000 in capital gains if you are married and filing a joint return. (The exclusion limit is $250,000 for other tax filers.) You will need to pass the IRS's ownership and use tests to show that the home has been your primary residence for at least two of the past five years. In addition to mortgage interest, you can also deduct your local property taxes on your income tax return.
Buying a home is a rewarding experience. You derive a great deal of personal satisfaction from owning a home. Homeownership allows you to build up your personal net worth over time. Moreover, long-term increases in housing prices nationwide makes homeownership a relatively attractive investment.
In some cases, renting may be a more attractive option. For example, if you plan to move in a year or two, you are unlikely to recover the closing costs you pay when you buy a home. In addition, finding a home to buy generally takes more time than looking for an apartment to rent.
In addition to building up equity over time, owning a home offers significant tax breaks. The interest expense that you pay on up to $1 million in home mortgage debt ($500,000 if you are married and filing a separate return) is tax-deductible.
Your tax savings from the mortgage interest tax deduction are greatest in the early years of a mortgage loan. For example, on a 7%, 30-year fixed rate mortgage loan of $100,000, you pay $6,968 in interest the first year of the loan. If you are in the 25% income tax bracket, your tax savings are $1,742. In Year 16 of the loan, you pay $5,090 in interest, which saves you $1,273 in taxes. In Year 24 of the loan, you pay $2,926 in interest, which saves you $732 in taxes.
When you sell your home, you can exclude up to $500,000 in capital gains if you are married and filing a joint return. (The exclusion limit is $250,000 for other tax filers.) You will need to pass the IRS's ownership and use tests to show that the home has been your primary residence for at least two of the past five years. In addition to mortgage interest, you can also deduct your local property taxes on your income tax return.
Friday, August 15, 2008
Hurricane Shoals Art in the Park - Sept. 20 - 21
http://www.selectbrokersrealty.com
If you are from Braselton, Hoschton, Jackson County or North Georgia you don't want to miss this festival on Sept. 20 - 21.
The festival will feature a 5K Mill Race, Duck Dash, Antique Automobiles, corn meal being ground, Exhibits, Arts, Crafts and Food. A new addition this year will be the miniature golf course, “Spirit of the River.”
All proceeds are used to maintain and improve Hurricane Shoals Park, which is located between Maysville and Jefferson.
Vendors are needed for the 18th annual Art in the Park festival planned for Sept. 20-21 at Hurricane Shoals Park.
Craft and food vendors are asked to contact Marsha Baxter at 706-850-5615 or 706-202-8285. For more information, go to www.hurricaneshoalspark.org.
If you are from Braselton, Hoschton, Jackson County or North Georgia you don't want to miss this festival on Sept. 20 - 21.
The festival will feature a 5K Mill Race, Duck Dash, Antique Automobiles, corn meal being ground, Exhibits, Arts, Crafts and Food. A new addition this year will be the miniature golf course, “Spirit of the River.”
All proceeds are used to maintain and improve Hurricane Shoals Park, which is located between Maysville and Jefferson.
Vendors are needed for the 18th annual Art in the Park festival planned for Sept. 20-21 at Hurricane Shoals Park.
Craft and food vendors are asked to contact Marsha Baxter at 706-850-5615 or 706-202-8285. For more information, go to www.hurricaneshoalspark.org.
Thursday, August 14, 2008
Tax Benefits Make Now a Great Time to Buy a Home
http://www.selectbrokersrealty.com Press Release
Ray Vaughn , president and broker of Select Brokers Realty, calls the $7,500 real estate tax credit to first-time home buyers in the new housing stimulus legislation an example of “trickle-up” economics. “As first-time home buyers enter the real estate market, armed with an extra $7,500, they increase the demand for homes in Braselton, Hoschton and Jackson County Ga. and in the process help stabilize the market value of homes,” he says. “As they purchase their first home, they free those who are selling their first homes to move up in the real estate market to more expensive homes. Those who had $200,000 homes now buy houses in the $300,000 range. That allows more home owners to sell and move up in the market as well as allowing empty nesters and recent retirees an opportunity to downsize. Mortgage brokers, Realtors® and home builders in Braselton, Hoschton and Jackson County Ga. receive critical new clients and the benefits don’t stop there. Sales of furniture, electronics, household items, landscaping supplies and home improvement items also increase. An escalation in sales also boosts manufacturing and shipping. The process profits the broader community because all these transactions infuse tax revenue into the system, benefiting the community in a variety of ways.” Ray applauds Congress for providing this tax incentive for home buyers. “Now it is up to the American consumer to realize this is a great time to buy a home,” he says. “With interest rates between 6% and 7%, tax rebates and credits from the federal government and a buyer’s market, it’s a great time to make the American Dream a reality.”
Ray Vaughn , president and broker of Select Brokers Realty, calls the $7,500 real estate tax credit to first-time home buyers in the new housing stimulus legislation an example of “trickle-up” economics. “As first-time home buyers enter the real estate market, armed with an extra $7,500, they increase the demand for homes in Braselton, Hoschton and Jackson County Ga. and in the process help stabilize the market value of homes,” he says. “As they purchase their first home, they free those who are selling their first homes to move up in the real estate market to more expensive homes. Those who had $200,000 homes now buy houses in the $300,000 range. That allows more home owners to sell and move up in the market as well as allowing empty nesters and recent retirees an opportunity to downsize. Mortgage brokers, Realtors® and home builders in Braselton, Hoschton and Jackson County Ga. receive critical new clients and the benefits don’t stop there. Sales of furniture, electronics, household items, landscaping supplies and home improvement items also increase. An escalation in sales also boosts manufacturing and shipping. The process profits the broader community because all these transactions infuse tax revenue into the system, benefiting the community in a variety of ways.” Ray applauds Congress for providing this tax incentive for home buyers. “Now it is up to the American consumer to realize this is a great time to buy a home,” he says. “With interest rates between 6% and 7%, tax rebates and credits from the federal government and a buyer’s market, it’s a great time to make the American Dream a reality.”
Wednesday, August 13, 2008
Should You Disclose Facts That Affect Your Property
http://www.selectbrokersrealty.com
Sure it can be frustrating, exhausting and time-consuming to sell a home in some markets, but don't try to cut corners by failing to make the proper disclosures.
Not only is it illegal for you and your agent not to disclose certain material facts that can affect the value, desirability or salability of a home, most savvy buyers will quickly walk away if he or she suspects deceit.
If you lie by omission and get caught, not only can you face both local and federal charges, you'll still have a home to sell in a less-than-hospitable market. The extra time to sell your home and your day in court could stigmatize the property.
Of course, if you honestly don't know about an issue, or there's little if any chance you could have known, you obviously can't report it.
It's not a bad idea to get a home inspection so you do know. An inspection reveals your attempt at discovery, it will help you determine which items need repair or replacement (not that you are required to make certain repairs), you can use it to price your home and it's a good negotiating tool.
In any event, a good rule of thumb, when it comes to whether or not something should be disclosed: "If you can't figure it out, don't leave it out."
Sure it can be frustrating, exhausting and time-consuming to sell a home in some markets, but don't try to cut corners by failing to make the proper disclosures.
Not only is it illegal for you and your agent not to disclose certain material facts that can affect the value, desirability or salability of a home, most savvy buyers will quickly walk away if he or she suspects deceit.
If you lie by omission and get caught, not only can you face both local and federal charges, you'll still have a home to sell in a less-than-hospitable market. The extra time to sell your home and your day in court could stigmatize the property.
Of course, if you honestly don't know about an issue, or there's little if any chance you could have known, you obviously can't report it.
It's not a bad idea to get a home inspection so you do know. An inspection reveals your attempt at discovery, it will help you determine which items need repair or replacement (not that you are required to make certain repairs), you can use it to price your home and it's a good negotiating tool.
In any event, a good rule of thumb, when it comes to whether or not something should be disclosed: "If you can't figure it out, don't leave it out."
Monday, August 11, 2008
Seller Funded Gifts Disappear With FHA Loans
http://www.selectbrokersrealty.com
Starting January 1, the minimum downpayment for an FHA loan will be 3.5 percent. That's a half point higher than the current minimum, but Congress wants to make sure borrowers have a real investment in the house they buy.
Borrowers can still get help with that downpayment, such as gifts from relatives, local government and trade union homeownership programs -- but starting October 1 -- not January 1 -- they won't be able to use any of the popular downpayment assistance programs run by organizations that funnel “gifts” from home sellers to buyers. Organizations such as Nehemiah, Incorporated and Ameridream will no longer be able to provide seller-funded gifts in connection with FHA mortgages.
So if you're a home buyer -- or a real estate or mortgage professional working with home buyers -- keep that October 1 deadline in mind
Starting January 1, the minimum downpayment for an FHA loan will be 3.5 percent. That's a half point higher than the current minimum, but Congress wants to make sure borrowers have a real investment in the house they buy.
Borrowers can still get help with that downpayment, such as gifts from relatives, local government and trade union homeownership programs -- but starting October 1 -- not January 1 -- they won't be able to use any of the popular downpayment assistance programs run by organizations that funnel “gifts” from home sellers to buyers. Organizations such as Nehemiah, Incorporated and Ameridream will no longer be able to provide seller-funded gifts in connection with FHA mortgages.
So if you're a home buyer -- or a real estate or mortgage professional working with home buyers -- keep that October 1 deadline in mind
Thursday, August 7, 2008
Barrow County BOE Considers Charter System
http://www.selectbrokersrealty.com
The Barrow County Board of Education met Thursday to discuss wheather the county school system should convert to a charter system.
A charter system is a publicly funded entity and is exempt from certain legislative requirements. Currently, over 1.3 million students nationwide are enrolled in over 3,900 existing charter schools.
Let me know what you think about this. ray@selectbrokersrealty.com
The Barrow County Board of Education met Thursday to discuss wheather the county school system should convert to a charter system.
A charter system is a publicly funded entity and is exempt from certain legislative requirements. Currently, over 1.3 million students nationwide are enrolled in over 3,900 existing charter schools.
Let me know what you think about this. ray@selectbrokersrealty.com
Wednesday, August 6, 2008
Jackson County & Barrow County ELECTION FINAL
http://www.selectbrokersrealty.com
Smith is new District Attorney, Hunter Bicknell wins BOC chairman of Jackson County; Yearwood over Garrison in Barrow BOC race.
Brad Smith will be the new District Attorney for the Piedmont Judicial Circuit. Smith won the runoff election against Donna Sikes 5,502 to 4,218. The balloting for the seat was in Jackson, Barrow and Banks counties.
In Jackson County, Hunter Bicknell won the board of commissioners chairman's seat against Ron Johnson 2,648 to 1,788.
In Barrow County BOC Chairman seat, challenger Danny Yearwood defeated incumbent Doug Garrison 2,542 to 1,600.
Smith is new District Attorney, Hunter Bicknell wins BOC chairman of Jackson County; Yearwood over Garrison in Barrow BOC race.
Brad Smith will be the new District Attorney for the Piedmont Judicial Circuit. Smith won the runoff election against Donna Sikes 5,502 to 4,218. The balloting for the seat was in Jackson, Barrow and Banks counties.
In Jackson County, Hunter Bicknell won the board of commissioners chairman's seat against Ron Johnson 2,648 to 1,788.
In Barrow County BOC Chairman seat, challenger Danny Yearwood defeated incumbent Doug Garrison 2,542 to 1,600.
Tuesday, August 5, 2008
How To Start a Neighborhood Watch Ptogram
http://www.selectbrokersrealty.com
Crime is a major concern for communities in Braselton, Hoschton, Jackson County and across the United States. Through a well organized Neighborhood Watch program, you can dramatically reduce crime in your neighborhood. Statistics show that most burglaries occur in neighborhoods without an organized Neighborhood Watch group.
In order to start a Neighborhood Watch, you must establish a partnership with a local law enforcement agency. To get started:
Recruit as many neighborhors as possible to discuss the needs of your community.
Decide on a date and place for an initial Neighborhood Watch meeting.
Contact your local police department or sheriff's office and invite them to your initial meeting.
You will be assigned a prevention officer who will attend your first meeting and help you develop an action plan.
For more information, visit http://www.usaonwatch.org
Crime is a major concern for communities in Braselton, Hoschton, Jackson County and across the United States. Through a well organized Neighborhood Watch program, you can dramatically reduce crime in your neighborhood. Statistics show that most burglaries occur in neighborhoods without an organized Neighborhood Watch group.
In order to start a Neighborhood Watch, you must establish a partnership with a local law enforcement agency. To get started:
Recruit as many neighborhors as possible to discuss the needs of your community.
Decide on a date and place for an initial Neighborhood Watch meeting.
Contact your local police department or sheriff's office and invite them to your initial meeting.
You will be assigned a prevention officer who will attend your first meeting and help you develop an action plan.
For more information, visit http://www.usaonwatch.org
Monday, August 4, 2008
Need More Water in Braselton, Hoschton, Jackson County? Dig Your Own Well
http://www.selectbrokersrealty.com
Home owners in the Braselton, Hoschton and Jackson County areas who have been faced with water restrictions because of the lingering drought in the area are drilling their own wells to keep their lawns lush and their pools full.
So far this year, for instance, there have been 305 permits to drill new wells issued in Atlanta’s Fulton County and 95 permits in Raleigh, N.C.
Drilling companies bore holes usually 300 to 600 feet deep into fractured rock and then extract the water with an electric pump discreetly hidden in the shrubbery.
The practice has outraged water conservationists and other less-well-heeled home owners.
Legislators in North Carolina tried but failed to pass a law that would have imposed the same watering restrictions on private wells as on municipal water.
Jim Kennedy, Georgia’s state geologist says the practice could become a problem if a significant number of homeowners dig wells and pump a lot of water, “But so far we’re not at that point,” he says.
Before you drill contact your local water authority in regard to latest rulings.
Home owners in the Braselton, Hoschton and Jackson County areas who have been faced with water restrictions because of the lingering drought in the area are drilling their own wells to keep their lawns lush and their pools full.
So far this year, for instance, there have been 305 permits to drill new wells issued in Atlanta’s Fulton County and 95 permits in Raleigh, N.C.
Drilling companies bore holes usually 300 to 600 feet deep into fractured rock and then extract the water with an electric pump discreetly hidden in the shrubbery.
The practice has outraged water conservationists and other less-well-heeled home owners.
Legislators in North Carolina tried but failed to pass a law that would have imposed the same watering restrictions on private wells as on municipal water.
Jim Kennedy, Georgia’s state geologist says the practice could become a problem if a significant number of homeowners dig wells and pump a lot of water, “But so far we’re not at that point,” he says.
Before you drill contact your local water authority in regard to latest rulings.
Friday, August 1, 2008
7 Dos and Don’ts for Legal 1031 Tax Exchanges
http://www.selectbrokersrealty.com
If your thinking of exchanging property in Braselton, Hoschton and Jackson County thru a 1031 here are some tips to remember.
Rochelle Stone and John Mangham of Starker Services Inc. in Los Gatos, Calif., share these tips on how to avoid common legal mistakes in 1031 exchanges.
1. Do know how to count. Like-kind exchange rules allow 180 days to complete the transaction, which includes the 45 days for the identification of a replacement property. Weekends and holidays count, and no extensions are granted, so don’t get it wrong.
2. Don’t assume a second home qualifies for an exchange. Vacation property must be an investment (which means you don’t live there for more than 14 days a year or 10 percent of the time it’s rented) or used in a trade or business to qualify for a 1031 exchange.
3. Do exchange for a property equal or greater in value. If your client exchanges for a property of lesser value, the unspent money will be taxable as capital gains.
4. Do replace your debt. Taking out a mortgage at a lower level during an exchange creates a taxable event. If your clients want a lower mortgage payment, they have to bring cash to the transactions.
5. Don’t ignore recapture. Any depreciation an investor has previously taken must be deducted from the basis of the property before calculating any gain.
6. Don’t forget to set up the exchange before the transaction closes. You need to include a stipulation in the purchase agreement so that the funds from a property’s sale transfer to a qualified intermediary instead of to the sellers during the closing.
7. Do give the buyers and exchangers a refund on any earnest money advanced from their own cash for a property that is later transferred through a 1031 exchange. This refund will come from the intermediary, who will replace the amount with exchange funds.
Note: These are not all the rules that govern 1031 exchange contact your tax advisor before entering into an agreement.
If your thinking of exchanging property in Braselton, Hoschton and Jackson County thru a 1031 here are some tips to remember.
Rochelle Stone and John Mangham of Starker Services Inc. in Los Gatos, Calif., share these tips on how to avoid common legal mistakes in 1031 exchanges.
1. Do know how to count. Like-kind exchange rules allow 180 days to complete the transaction, which includes the 45 days for the identification of a replacement property. Weekends and holidays count, and no extensions are granted, so don’t get it wrong.
2. Don’t assume a second home qualifies for an exchange. Vacation property must be an investment (which means you don’t live there for more than 14 days a year or 10 percent of the time it’s rented) or used in a trade or business to qualify for a 1031 exchange.
3. Do exchange for a property equal or greater in value. If your client exchanges for a property of lesser value, the unspent money will be taxable as capital gains.
4. Do replace your debt. Taking out a mortgage at a lower level during an exchange creates a taxable event. If your clients want a lower mortgage payment, they have to bring cash to the transactions.
5. Don’t ignore recapture. Any depreciation an investor has previously taken must be deducted from the basis of the property before calculating any gain.
6. Don’t forget to set up the exchange before the transaction closes. You need to include a stipulation in the purchase agreement so that the funds from a property’s sale transfer to a qualified intermediary instead of to the sellers during the closing.
7. Do give the buyers and exchangers a refund on any earnest money advanced from their own cash for a property that is later transferred through a 1031 exchange. This refund will come from the intermediary, who will replace the amount with exchange funds.
Note: These are not all the rules that govern 1031 exchange contact your tax advisor before entering into an agreement.
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