Volume 5 | July 24th, 2019
Want to buy or sell? Call Brandon today at (707) 616-8752
A 1031 exchange is a powerful real estate tool that allows an investor to sell their property and reinvest the proceeds while deferring capital gains tax. 1031 is a section of our tax code that applies to investment properties only, primary residences excluded. There are several different companies that will facilitate a 1031 exchange, my personal favorite being IPX because of their great communication and willingness to walk clients through the process step by step. Each 1031 exchange comes with a setup fee, typically around $850.

Their are several different requirements in order to complete a 1031 exchange, including:
  • Exchange property needs to be a rental for about 18m-2 yrs before you can sell as an investment property using a 1031 exchange.
  • 'Flips' are not considered investment real estate.
  • Subdivided properties can be sold using a 1031 exchange before properties are divided.
  • You have 45 days to identify purchase properties and 180 days to close escrow. The 45 day clock starts on the closing day of the sold property.
  • If you're selling multiple income properties, the 45 day clock starts when the first property closes.
  • All income from sale must be rolled into purchase (equal or greater to sale)

There are four major red flags that often pop up when trying to complete a 1031 exchange.

  • Seller Financing - Does not work when selling your property, but would work for the purchase property.
  • Family - Cannot buy from or sell to related parties.
  • Intermediary - Unfortunately, there is a lot of fraud because there is no license or bonding needed.
  • Vesting - Same tax payer has to sell and buy each property. If you want to use an LLC and owners want to sell and buy, then all parties within the LLC need to be on board.
  • New listings continue to bob, coming down from last weeks high 70's but still above our summers weekly average.

  • Pending properties continue to remain consistent in the mid to high 40's.

  • Sold properties also remain fairly regular hovering around our weekly average in the mid to high 30's.
Want more info on the buying or selling process?
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The Price of Money

Interested in current interest rates? Please call or visit Humboldt Home Loans for detailed information.

(707) 269-2334 - HumboldtHomeLoans.com

CalBRE - Lic # 01226140 NMLS #294953
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Thank you for taking the time to read this. I appreciate your patience as I iron out the wrinkles on the way to an informative and compact weekly report.

I look forward to working with you in the future!
Brandon Brown
RE/MAX Humboldt Realty
2222 Myrtle Ave, Eureka CA 95501
DRE# 02031396

www.BrandonBrownRealtor.com - 707.616.8752 - bbrown@humboldtrealty.com