Header August 2013

       1031 Resources                         The 1031 CORP. Advantage                            Wealth Building Webinars 

Avoid Taxable Boot in a 1031 Closing

Tips to Prevent an Unexpected Tax Bill

We'veClosing Table all sold properties and are tempted to postpone paying expenses until closing when we can have the closing officer put them on the closing statement and just pay them from the sale proceeds. Unfortunately, when effecting a 1031 tax-deferred exchange, anything other than routine closing costs could trigger a taxable event. 


The Qualified Intermediary (QI) will provide the closing officer with instructions to make sure the transaction is documented as a 1031 exchange and not a taxable sale.  Whenever possible, the QI always tries to review the closing statement prior to closing to address any potential red flags in advance of closing.  More importantly, the QI wants to make sure the Exchanger does not receive or have rights to any of the exchange funds either directly or indirectly which create a taxable event.


Click here for tips to help you avoid an unexpected taxable event because of charges paid with 1031 exchange funds.


Tax Reform & 1031 Exchanges
Legislative Update
Library of Congress
There are no updates to report on how section 1031 might be affected by potential tax reform.  We will continue to keep you updated. For those who have sent letters to your Congressional leaders, thank you for your support. It is certainly appreciated!

Carryover Basis and Depreciation

Impact of a 1031 Exchange

Basis of Replacement PropertyTax Code book

The basis of the replacement property is lowered by the deferred gain. Essentially, the old basis is carried to the new property and increased by any additional property value acquired.

Depreciation of the Replacement Property

The basis of the replacement property acquired in a 1031 exchange is generally the same as that of the relinquished property less any cash received plus any gain recognized. Notice 2000-4 clarified how MACRS replacement property in a 1031 exchange should be depreciated.  The MACRS replacement property should be treated in the same manner as the MACRS relinquished property with respect to your basis in the replacement property provided it does not exceed the adjusted basis in your relinquished property.  The replacement property is depreciated over the remaining recovery period, and using the same depreciation method and convention as that of the relinquished property.  Any excess basis in the replacement property is treated as newly acquired MACRS property. There will generally be at least two different depreciation schedules in place on one asset. Notice 2000-4 applies to properties placed into service on or after January 3, 2000. T.D. 9115 (2/27/04) is a clarification of Notice 2000-4 and gives you the option to elect out of this depreciation treatment.

Your tax advisor can help you determine the basis of your replacement property and the best way to depreciate it.


Trending this Month...  Family on Beach
Resort Area Homes

After years of only occasionally seeing a transaction involving a resort area home, we have clients buying and selling them all over the place again. Many are taking advantage of the opportunity to trade up. Of course, vacation homes usually do not qualify but you could certainly use the home as a rental for two years and safely convert into your dream vacation home. Learn how.

Wealth Building Webinars
webinarJoin us for our complementary Wealth Building Webinar Series designed to help you build and preserve wealth. Click on the link below for webinar descriptions and to register.


Thursday, August 29, 2013;  12:00 - 12:45 PM EST 

1031 Exchanges as a Retirement and Estate Planning Tool 


Thursday, September 5, 2013;  12:00  - 12:45 PM EST  

1031 Exchanges Made Easy 


Thursday, September 19, 2013;  12 - 12:45 PM EST

Current Trends in 1031 Exchanges 


Thursday, September 26, 2013;  12 - 12:45 PM EST

1031 Exchange of Vacation Homes


Article Exchange

Following are articles related to 1031 exchanges, taxes, real estate and related topics you may find of interest.


Strengthening Economic Activity Seen Offsetting Investor Concerns Over Interest Rates

CoStar Group

August 7, 2013      


The President Moves on Housing Reform 


August 6, 2013


July Existing-Home Sales at Highest Level Since 2009 


August 21, 2013


Homeownership Still a Good Decision Even as Mortgage Rates Change 

Realty Times

August 7, 2013 


If you have an article you would like to share, please forward it to Margo McDonnell,CES� and we'll include it in next month's reading list.
Message from our President
Margo McDonnell
Dear Friends,

I am sure I am not the only one wondering how summer flew by so quickly!  For those of us in the Philadelphia area, we have not hit 90� since July 21st and we are wondering what weather autumn might bring.  One thing is certain for 1031 CORP., this is not your usual August.  Traditionally, business slows in August but not this year - not even on Friday afternoons!  We are definitely not complaining as we are truly grateful for the opportunity and excited to help so many defer gain and accomplish their investment goals. 


Enjoy the last few days of summer and wishing you a nice Labor Day weekend!


Best Regards,
About 1031 CORP.
Serving as a nationwide qualified intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP. strives to provide a superior exchange experience for our customers and their advisors.  We provide our customers with enhanced security of funds, knowledgeable exchange professionals and a commitment to keep the exchange process simple for our customers and their advisors.  Every member of the exchange team is a Certified Exchange Specialist� and has the experience and expertise to facilitate even the most complex exchange transaction, including reverse, improvement and personal property exchanges.  Additional information can be found at www.1031CORP.com.
In This Issue
Avoid Taxable Boot in a 1031 Closing
Tax Reform & Section 1031: Legislative Update
Carryover Basis and Depreciation of a 1031 Replacement Property
Trending this Month
Wealth Building Webinars
Article Exchange
Message from our President

Margo McDonnell

Margo McDonnell, CES
Certified Exchange Specialist
1.800.828.1031 ext. 212
Mobile: 610.680.6896
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1031 CORP. Logo

Sue Umstead, CES 
Certified Exchange Specialist
Senior Vice President
1.800.828.1031 ext. 208
Mobile: 610.755.8520

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1031 CORP. Logo

Marissa LoCascio, CES
Certified Exchange Specialist
Senior Exchange Officer
1.800.828.1031 ext. 210
Mobile: 610.742.4351

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Rich Heller

Richard Heller, Esq., CCIM, CES
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 Bettye Matthews

Bettye J. Matthews, CPA
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Joseph F. Szajnecki, CES�
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