The Flip Board

(Listen Here 5:35 min)

Have you received property as a gift? 

Is the property valuable?

Do you think you might sell the property in the future a big profit? 

You may be wondering How is Gain Calculated When You Sell Property That You Received As a Gift:  AND HOW TO SAVE MONEY IN TAXES…

When you sell a property (such as a capital asset like land), the difference between the sale price and the seller’s basis in your property (which is usually its previous cost), is either a capital gain or a capital loss.

A capital gain occurs when your property sells for more than your basis. A capital loss occurs if your property sells for less than your basis.

            Sale Price
     -     Basis
___________________
           Gain (or loss)

What is Your Basis: 

When you are “gifted” a property, you take the property with a “carry over basis”.  That means that your basis is the same as the basis of the person who gave it to you. 

Another way of saying this is your “carry-over” basis (as the recipient or donee of the gifted property) is the same basis as your donor’s; the basis is simply “shifted over” when the gift is made to you.  [IRC Section 102 – Gifts and Inheritances of property are not included in the gross income of the donee at the time of the gift if donor was acting out of love, affection, admiration, respect, etc.]

(Listen Here 4:01 min)

Buyer Beware – Check Out Your QI Before You Sell

Before you hire a qualified intermediary, you should do some checking around to make sure that they have a good reputation and solid track record of satisfied clients.  Here are some easy ways to verify that your dealing with a reputable, experienced QI:

(1) If your QI is a licensed attorney, you can easily check with their state’s board of attorney professional responsibility and state bar association.  For example in Minnesota, you can go online to http://www.mnbar.org/ and confirm that your QI is a member of the Minnesota State Bar Association.  Other states have similar online directories.

(2) Contact the Better Business Bureau (“BBB”) and see if your QI has a good reputation in the business community and if your QI BBB accredited.  You can also check online at https://www.bbb.org

(3) Check and see how long your QI has been in business with the Secretary of State’s office.  For example, in Minnesota business records are available on line at:

http://da.sos.state.mn.us/minnesota/corp_inquiry-find.asp?:Norder_item_type_id=10&sm=7

(4) You can also ask your QI if they have a fidelity bond or other special certifications.

Saving money in taxes is a strong motivator.  I hope this information helps you safely and successfully navigate through the 1031 tax deferral process.

People in Real Estate are always looking for new and improved ways of marketing their products and services. While many of the old methods still work in most cases, technology allows us to reach the masses quicker and a lot cheaper. Read the rest of this entry »

During the work day I usually keep CNBC on to see if the Talking Heads are doing something entertaining on any given day. Usually I keep the volume low or muted until a story or person of interest pops up. As the latter hours of the morning were coming to a close the CNBC “Real Estate Task Force” with Re/Max CEO Margaret Kelly and Charles Cohen from Cohen Brothers Realty popped up.

I figured on my way out to lunch I would at least give this motley crew a few seconds of my time. I didn’t listen to the whole thing when I started to realize that lending a few seconds of my time was turning into destroying a few points of my IQ. Lucky for us it didn’t take long into the segment before Diana Olick began to spew pure comical economic ignorance out of her mouth.

Olick was quoted as saying, “We thought that commercial [real estate] was going to do far better because the theory was that commercial didn’t overbuild the way that residential real estate did.”

 Here’s a link to the full clip.

 http://www.cnbc.com/id/15840232?video=1021445476&play=1 Read the rest of this entry »

(Listen Here 2:59 min)

Even More Safeguards – Adding a UCC-1 Security Agreement

Want even more safety…Another way to add extra security is to perfect a UCC security interest in both the account held by your FDIC insured bank and in the qualified escrow agreement itself.  You can do this by filing a UCC-1 financing statement with the secretary of state where your 1031 monies are deposited.

That way in the unlikely event that your QI fails to perform, your not only a creditor, but a you’re a “secured creditor”.  If a problem were to occur, it is always much better to be a secured creditor, because secured creditors have first priority to get paid over all other unsecured creditors.

Here is a 1031 Tip: Make sure your FDIC insured bank acting as your qualified escrow agent consents to the security agreement in writing, otherwise you may not get a properly perfected security interest in the qualified escrow account.

Remember, when your exchange is over, you will need to file UCC-3 to terminate your security interest in the deposit account.

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