The Flip Board

There was a time when the tops and bottoms of markets were called by what was on the front cover of Time magazine. Read the rest of this entry »

Are you having a tough time flipping your property? During this time of correction, we may have to change our strategy a little.  Read the rest of this entry »

Check out this hitpiece by New York Times flunkie Michael Grynbaum.  Nothing but doom and gloom from the NYT lately. But, let’s give credit where credit is due. Read the rest of this entry »

For years tax controversies have stemmed from taxpayers selling their highly appreciated vacation/second homes. The problem has been that these "personal use" vacation-properties have fallen outside of the favorable tax treatments that many other real properties qualify for.

Second, despite the fact that many taxpayers feel that their second home or vacation condo is one of the best "investments" they ever made, and should qualify for tax deferral under Section 1031 (provides for non-recognition or deferral of capital gains tax for exchanges of properties held for "Investment" or for use in a "Trade or Business"); the IRS does not agree that these "personal use" type properties qualify for 1031 exchange treatment.

The IRS takes the position that vacation homes are held primarily for personal use rather than for investment. In May of 2007, the IRS successfully convinced the Tax Court that a taxpayer's exchange of a lake-side vacation home for another did not qualify as a 1031 exchange despite the taxpayer's expectation that the property would appreciate in value and could eventually be sold at a gain; Moore v. Commissioner, T.C. Memo. 2007-134.

Revenue Procedure 2008-16 requires that both the "relinquished property" that is sold and the "replacement property" that is purchased, must be used by the taxpayer consistent with a Qualifying Use Standard:

1. TWO YEAR "OWNERSHIP" TEST: The taxpayer must have owned the vacation home for least 24 months immediately before the exchange;

2. "USE" TEST FOR EACH OF THE PRIOR TWO YEARS: The taxpayer must have within each of the prior two 12-month periods immediately preceding the exchange:

   (i) rented out the vacation home to another person or persons at a fair rental for 14 days or more, and

   (ii) not used the vacation home for personal use for more than 14 days; or more than 10 percent of the number of days during the 12-month period that the vacation home was actually rented at a fair rental.

A similar Qualifying Use Standard must be applied to any vacation home replacement properties. The taxpayers may take only limited personal use of their rented replacement properties for the 24 month period after completing their 1031 exchange into a vacation home.

Section 1031 has a very broad "like-kind" standard for real property. Generally any real property within the United States that is held for "Investment" or for use in a "Trade or Business" can be exchanged for other US real property that will also be held for "Investment" or for use in a "Trade or Business".

Raw land may be exchanged for improved real property. Commercial property may be exchanged for residential rental property. Undoubtedly, many taxpayers who have grown weary of property management will consider purchasing vacation homes to be placed into a rental pools with the fringe benefit of occasional personal.

A smart taxpayer desiring more recreation might consider exchanging into multiple vacation home replacement properties. Each property would have a separate 14 day/ 10% personal use allowance. This is more advantageous than buying only one vacation home replacement property that would allow for less personal usage.

I was all set to write up an article telling you to stick to your plan and to give you an update on my current deal, when the news broke: Read the rest of this entry »

Donald Trump’s brokerage firm has completed its final morph into a full service Read the rest of this entry »

If you want respect in the Real Estate game, do everyone a favor and return phone calls.

Or simply keep your word - If you say you are going to call someone at a predetermined time, then call them at that time. Leave a voicemail if necessary.

This very simple activity will reduce stress and win business partners like you would not believe…

Just do it.

Here’s an encouraging article I found in the New York Times online pub about two of Silicon Valley’s biggest names failing miserably at real estate development, particularly in the Miami area. This article, written just after Christmas, reminds me of a few lessons we can take time to reflect on.

 1. Success in one area does not guarantee success in another.

Just because you made a lot of money in “dot coms” doesn’t mean RE development will be a snap.  Be humble in your new endeavor.

 2. You  can always learn something new.

Again, be humble and surround yourself with experts in your new endeavor. You rarely have to be the smartest person in the room in order to be the richest person in the room!

 3. Perseverance is critical to your success.

Don’t give up! The aboslute worst thing Jim Clark and Tom Jermoluk can do now is quit.  Simply rethink their strategy. They have a $110 million construction loan to pay off and the property is no longer worth that. Hmm… Could they get it re-zoned as commercial?  Or, sell the entire project to someone else like Me or Donald Trump?

If you can get away with buying a property without spending one dime of your own money, you will have stumbled upon a great Read the rest of this entry »

Let’s just get right to it. Shall we? I found a property I think I can flip in about 60 days… Read the rest of this entry »