Rex's Golden Eagle Realty II - Land, Homes, Commercial

1031 Exchanges, Trusts, 401K, IRA's


I have found this area very helpful and interesting.  If you have gotten this far in my website, then you are as interested as I am in making your retirement as good as it should be.  Look through this page, click on the sites, call these guys and pick their brains.  Hopefully you will find them as helpful as I have.

Thanks for being here,

Terry Conger

Tired of your IRA stocks diving instead of rising?

You can do this.  If you are interested in transferring your IRA or 401K into land investments, click the links below for information, look through their Home page for lots of other self directed IRA or 401K investment information.  Feel free to call them and ask questions.  Learn about self directed IRA's.  

Sterling Trust

 Guidant Financial Group 

NAFEP   The National Association of Financial and Estate Planning

Read this over, scroll down for a couple 1031 Exchange sites.

Federal Law permits you to defer paying capital gains tax when you relinquish property and replace it with other property(s).  To qualify, specific rules must be followed.

The benefits create extra cash.  Compounding cash creates wealth.

In a 1031 Exchange, you exchange property A for property B.

The sale proceeds from A are used to pay for the purchase of B.


Why exchange real property? To save taxes, yes, but said more succinctly, to
build your estate with pre-tax dollars. Using proper exchange techniques
results effectively in interest free loans from the government. Other
reasons to exchange include:

Increasing depreciable basis by acquiring property encumbered with a larger

Acquiring sheltered income by exchanging for unimproved land for improved

Acquiring property without cash, when sales may be impossible.

Consolidating  assets by exchanging many properties for one larger property.

Receiving nontaxable cash by exchanging and refinancing after and
independent of the exchange.

Diversifying holdings without tax consequence.

Sell     $150,000
Buy      $ 50,000
Gain     $100,000
Tax Brkt      30%
Tax      $ 30,000

Balance to invest: $70,000

Leveraged 4 to 1 results in a purchase of $280,000 10% annual appreciation
results in $28,000

If you structured the sale in accordance with section 1031, and did not have
to pay the taxes at that time, you could invest the entire $100,000
leveraged 4 to 1 and purchase a $400,000 property. At 10% appreciation, your
increase in equity is $40,000. Multiply this $12,000 equity buildup over a
20 year investment horizon and the result is substantial.

Internal Revenue Code Section 1031

No gain or loss shall be recognized if property held for investment is
exchanged solely for a property of like kind to be held either for :
1. Production of income
2. Investment
3. Productive use in trade or business

Property must be of "like kind." This means real property for real property,
personal property for personal property. "Like kind" is broadly defined,
that is, all real estate qualifies regardless of the "grade or quality." It
is the "nature or character" of the property (realty or personalty) and not
the name of the improvements (office building, apartment, hotel, etc)  that
determines "like kind". This was emphasized in Commissioner of  Internal
Revenue v. Chrichton. This case involved the exchange of mineral interests
and improved real property. The mineral interests were held to be like kind
property because under state law they were considered real property. In a
subsequent revenue ruling, the IRS indicated that water rights also met the
like kind test.

Property not qualifying

1. Stock in trade
2. Partnership interests
3. Stocks, bonds, notes
4. Dealer property

Multiple Properties

Nothing in Section 1031 prevents a taxpayer from exchanging out of or into
multiple properties.

Tax Consequences

Exchanges can be fully deferred or partially deferred. Any unlike kind
property received in the exchange is considered boot and is recognized
(taxable) in the year of the exchange. Boot is:

1. Cash or the equivalent of cash
2. Any unlike kind property
3. Mortgage relief
4. Any combination of the above

Cash paid offsets mortgage relief boot. The lower of the gain or the boot is
taxable in the year of the exchange.

For a completely tax deferred exchange you must trade up in equity, value,
and loan.

Basis of Property Received

This is referred to as substitute basis and is the Fair Market Value of the
property received minus the deferred gain (or plus any deferred loss).

The Process

As it is in any real estate transaction, you must first identify the
objectives of the property owner. What do they want to accomplish?
Management problems, lack of control, cash flow, tax concerns; sometimes the
owner is not sure of all the circumstances and it may take some time and
counseling to make the determination.
A basic requirement is that all participants receive the same value that
they give. The end result should be that there are as many winners as there
are participants. Determination of value to the participants in a real
estate exchange is not complete without considering the improvement the
transaction will make in the owner's life. The analysis must take into
consideration the personal circumstances of the participants lives.

Two Party Exchange

As mentioned before, to structure a completely tax deferred exchange, the
investor must acquire property (properties) with equal or greater equity and
a larger fair market value than the property transferred (up in equity and
value). This assumes that there is gain realized and that the taxpayer pays
boot and assumes a larger loan.


Mr. Carey owns an industrial property valued at $372,000 with a loan of
$351,000. His basis is $355,000.

He exchanges with Mr. Casey apartment complex which is valued at $420,000
and has a $381,000 loan against the property. His basis is $392,000.

Step 1: Balance the Equities

Basic Structures of a Multiparty Exchange

The very common three party exchange is comprised of a sale and an exchange,
or an exchange and a sale.

For more information on 1031 exchanges and someone to contact click below.

WAMU 1031 Exchange

IPX 1031 Exchange

NOTICE: These web sites are deemed reliable but not guaranteed by Terry Conger.  These sites are for information only and clients are advised to research each contact individually and thoroughly.

Terry Conger
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