HE REAL ESTATE PROFESSIONAL’S HANDBOOK: HOW TO HARNESS THE POWER OF EXCHANGE

the real estate Professional’s Handbook HoW to BeNeFit FroM tHe PoWer oF eXCHaNGe™ ™ THE REAL ESTATE PROFESSIONAL’S HANDBOOK HOW TO HARNESS THE POWER OF EXCHANGE NOTICES This handbook is only intended to provide a broad overview regarding many aspects of IRC Section 1031 tax deferred exchanges. It is not designed to address all tax deferred exchange issues, nor the specific circumstances that may be faced by an individual investor. Asset Preservation, Inc. does not provide tax or legal advice. All investors are urged to seek independent legal/tax guidance on each transaction as circumstances often change and can affect the validity of an IRC §1031 exchange. FOR MORE INFORMATION Contact Asset Preservation’s National Headquarters or Eastern Regional Office, or any local office for more information regarding: ⮹ Investor Workshops ⮹ Tax Deferred Exchange Training for Real Estate Professionals ⮹ Approved continuing education (one, three or four hours) seminars for real estate agents and brokers, attorneys and accountants ⮹ In-office seminars on advanced exchange topics (one, three or four hours) ⮹ Customized marketing materials A National IRC §1031 “Qualified Intermediary” www.apiexchange.com NATIONAL HEADQUARTERS 4160 Douglas Boulevard Granite Bay, CA 95746 Toll-Free: 800-282-1031 Fax: 916-749-1270 EASTERN REGIONAL OFFICE 4062 Grumman Boulevard, Bldg. 81A Calverton, NY 11933 Toll-Free: 866-394-1031 Fax: 631-614-7954 Member: © 2008 Asset Preservation, Inc. CONTENTS – PART I Introduction ............................................................................................................................................... 6 Benefits for Real Estate Professionals........................................................................................................ 7 Benefits for Real Estate Investors............................................................................................................... 8 Step-by-Step Strategy to Approach Investors........................................................................................... 10 Sample Introductory Marketing Letters.................................................................................................... 13 The API Advantage™................................................................................................................................... 15 Initiating an Exchange with Asset Preservation........................................................................................ 16 New Exchange Information Sheet – Sale (Phase 1).................................................................................. 17 New Exchange Information Sheet – Purchase (Phase II) ........................................................................ 18 CONTENTS – PART II Basics Requirements Variations A Sale vs. an Exchange ............................................................................................. 19 Exchange Basics........................................................................................................ 20 Five Reasons to Exchange........................................................................................ 21 Calculating Capital Gain.......................................................................................... 22 Introduction to Delayed Exchanges........................................................................ 23 §1031 Contract Language........................................................................................ 25 Exchange Terminology............................................................................................ 26 What is a Qualified Intermediary?.......................................................................... 27 What Does Not Qualify?.......................................................................................... 28 Requirements for Full Tax Deferral ........................................................................ 29 The Exchange Equation........................................................................................... 30 Partial Exchanges..................................................................................................... 31 Simultaneous Exchanges - Basics............................................................................ 32 Simultaneous Exchanges – What Not to Do.......................................................... 33 Stages of a Delayed Exchange.................................................................................. 34 Identification Rules.................................................................................................. 35 (G)(6) Requirements in a Delayed Exchange......................................................... 36 What Not to Do in an Exchange............................................................................. 37 Multiple Property Exchanges.................................................................................. 38 Reverse Exchanges ................................................................................................... 39 Like-Kind Issues Tax Law Updates Additional Issues Reverse Comparison................................................................................................ 40 Improvement Exchange – Build or Improve.......................................................... 41 Improvement – Additional Requirements............................................................. 42 Reverse – Improvement and Structure................................................................... 43 Like-Kind Property .................................................................................................. 44 Like-Kind Property – Where Located..................................................................... 45 How Long to Hold................................................................................................... 46 Primary Residence Rules – Section 121.................................................................. 47 Converting a Rental to a Residence ........................................................................ 48 Split Treatment Transactions.................................................................................. 49 Property Held for Sale ............................................................................................. 50 Vacation Home Exchanges...................................................................................... 51 Leasehold Interest.................................................................................................... 52 Tenant In Common – Exploring Programs........................................................... 53 Tenant In Common - Rev. Proc. 2002-22 ............................................................. 54 Easements................................................................................................................. 55 Personal Property Exchanges.................................................................................. 56 Oil, Gas and Mineral Rights.................................................................................... 57 Water Rights............................................................................................................. 58 Farm and Ranches.................................................................................................... 59 Timeshares & REITS................................................................................................ 60 Hotel Exchanges....................................................................................................... 61 Oil, Gas and Energy Programs................................................................................ 62 Principal Residence 5-Year Holding Period........................................................... 63 2003 California Withholding Law........................................................................... 64 2002 Primary Residence Update 9030.................................................................... 65 Summer 2007 – PLRs and Disaster Relief............................................................... 66 Seller Carryback Financing...................................................................................... 67 Partnerships.............................................................................................................. 68 Closing Costs............................................................................................................ 69 Refinancing............................................................................................................... 70 Holding Title to Real Property................................................................................ 71 Exchange Entities..................................................................................................... 72 Closing Exchanges.................................................................................................... 73 What Agents Need to Know.................................................................................... 74 Related Party Rules – Caution Needed................................................................... 75 Related Party Rules – Buying From - Rev. Rul. 2002-83....................................... 76 Related Party Rules – Teruya & PLR 2004-40002.................................................. 77 Preconstruction Sales............................................................................................... 78 Aircraft Exchanges................................................................................................... 79 Real Estate vs. Mutual Funds................................................................................... 80 Are Your Stocks Sinking?......................................................................................... 81 Security of Funds ..................................................................................................... 82 §1031 Tax Filing Requirements .............................................................................. 83 Taxing Thoughts...................................................................................................... 84 Replacement Property Calculations........................................................................ 85 Investment Returns.................................................................................................. 86 Nevada Qualified Intermediary Rules .................................................................... 87 FIRPTA Withholding Rules .................................................................................... 88 Six Strategies for Commissions............................................................................... 89 Identify Within 45 Days........................................................................................... 90 New York Cooperatives........................................................................................... 91 State Tax Withholding............................................................................................. 92 IRA in Real Estate..................................................................................................... 93 Parking Arrangements-Rev. Proc. 2004-51............................................................ 94 Disregarded Entities................................................................................................. 95 Converting a Residence to a Rental ........................................................................ 96 Real Estate Auctions................................................................................................. 97 Maximize Profits in Real Estate............................................................................... 98 Involuntary Conversions......................................................................................... 99 Disaster Area Tax Relief........................................................................................... 100 Deposits in an Exchange.......................................................................................... 101 Cost Segregation....................................................................................................... 102 Purchase Contracts.................................................................................................. 103 1031 and Cost Segregation Studies......................................................................... 104 What is an UPREIT?................................................................................................ 105 1031 Benefits for Financial Advisors....................................................................... 106 Selling Appreciated Property................................................................................... 107 Determine Property Values..................................................................................... 108 Return on Equity...................................................................................................... 109 ... - tailieumienphi.vn