The Exeter Group Real Estate Talk Radio Show for Monday, December 3, 2007 (Updated)

Monday, December 3, 2007

This week Byron Meo will discuss commercial real estate, including commercial real estate valuations, cash flow analysis, due diligence, geographic areas to buy, sell and hold commercial real estate, and more. Mr. Meo is a licensed Commercial Real Estate Agent with Keller Williams Realty and has years of extensive experience in real estate sales, brokerage, development, and investment.

In addition, Jason S. Buckingham, Esq. who is with the Law Offices of Jason S. Buckingham, Inc. and is President and Chief Executive Officer of Buckingham Commercial Real Estate Services will discuss "self-directed tenant-in-common investments — real estate TICS for the small investor." Mr. Buckingham also has an extensive background in title insurance and escrow services and would be happy to take any questions on these issues as well.

Co-hosts Bill Exeter and Sam Lee will provide an update on the mortgage and credit markets and will discuss year-end tax planning with 1031 exchanges, including strategies to deal with 1031 exchanges that fail toward the end of the year.

You can learn more at http://www.exetergroupradio.com/ for information on how to listen live or to prior recorded shows.

The Exeter Group Real Estate Talk Radio Show for Monday, December 3, 2007

Monday, December 3, 2007 Radio Show

This week Jason S. Buckingham, Esq. who is with the Law Offices of Jason S. Buckingham, Inc. and is President and Chief Executive Officer of Buckingham Commercial Real Estate Services will discuss "self-directed tenant-in-common investments — real estate TICS for the small investor."

Mr. Buckingham also has an extensive background in title insurance and escrow services and would be happy to take any questions on these issues as well.

Co-hosts Bill Exeter and Sam Lee will provide an update on the mortgage and credit markets and will discuss year-end tax planning with 1031 exchanges, including strategies to deal with 1031 exchanges that fail toward the end of the year.

You can review show dates, times and topics as well as listen to prior shows at http://www.exeter1031.com/radio_topics_show_dates.aspx.

The Exeter Group Real Estate Talk Radio Show for November 26, 2007

The Exeter Group Real Estate Talk Radio Show is live each and every Monday from 12:00 noon PST to 1:00 PM PST. The show explores and debates real estate-related subjects and issues in a way that both entertains and informs its listening audience.

"Looking for answers in real estate? We break it down for you."

Oil and Gas Investments

This week Certified Estate Advisor Rusty Tweed who is President, Chief Executive Officer and Founder of Tweed Financial Services, Inc. once again joins The Exeter Group Real Estate Talk Radio Show. The discussion will focus on real estate oil and gas interests, including drilling, existing and wildcat operations, as well as producing, royalty and working oil and gas interests.

Rusty will be joined by Chad Willis who is the Founder, President and Director of Texas Energy Holdings, Inc. and an expert in the structuring of oil and gas investment transactions.

Year End Planning with 1031 Exchanges

In addition to oil and gas investments, Mr. Exeter and Mr. Lee will discuss the various year-end planning opportunities available with 1031 exchanges.

Listen to The Exeter Group Real Estate Talk Radio Show Live

Visit our web page http://www.exeter1031.com/radio_topics_show_dates.aspx for information on how to tune in for this week's show.

Sample Legal Beneficiary Vesting for Seller Carry Back Notes

When you sell real estate or personal property that will be part of a 1031 exchange and you carry back an installment note (seller carry back financing) to facilitate the sale of the asset, the installment note must also be included as part of the 1031 exchange account held by your Qualified Intermediary in order to defer all of your income tax liabilities.

In other words, the note must be owned by and held by your Qualified Intermediary. You can learn more by reading our web page entitled "Seller Carry-Back Financing Combined with a 1031 Exchange."

The procedure to include the seller carry-back installment note as part of your 1031 exchange account is actually very easy. The installment note and the corresponding deed of trust or mortgage documents would be drafted with the Qualified Intermediary listed as the beneficiary or owner.

The installment note and corresponding documents cannot be drafted with your name listed as the beneficiary or owner. The documents must be drafted in the name of the Qualified Intermediary so that the Qualified Intermediary owns the installment note as part of your 1031 exchange account.

Drafting the note in your name will trigger "constructive receipt" of your 1031 exchanges funds or assets and create a taxable event.

Notes incorrectly drafted with your name as the beneficiary or owner cannot be corrected after the close of the transaction and generally will be treated as boot and taxed as an installment sale note under Section 453 of the Internal Revenue Code.

The following is the legal beneficiary vesting used on the installment note and corresponding deed of trust or mortgage when we adminster a tax-deferred exchange transaction:

Exeter 1031 Exchange Services, LLC,
as Qualified Intermediary for Exchange No. 00 0000
for the benefit of Jane Doe
402 West Broadway, Suite 400
San Diego, California 92101

Of course, this would not be required if you do not want to include the seller carry back note as part of your 1031 exchange and would prefer to treat it as an installment sale under Section 453 of the Internal Revenue Code. The documents would then be drafted with your name listed as the beneficiary or owner.

You can learn more at http://www.exeter1031.com/seller_carry_back_legal_vesting.aspx.

Seller Carry Back Note Combined with a 1031 Exchange

You may be requested by real estate buyers from time-to-time to assist them in the acquisition of your real property ("relinquished property") by helping them with the financing.

This means they are asking you to carry back an installment note or promissory note, which is often referred to as "Seller Financing," "Seller Carry Back Financing," or a "Seller Carry Back Note."

Seller carry back promissory notes can be very powerful sales tools when negotiating and structuring real estate transactions, especially in rising interest rate environments, distressed real estate markets and tight credit markets.

This type of financing can also be a very effective income tax planning and/or estate tax planning strategy for you if you do not want to 1031 Exchange into other like-kind replacement properties.

However, seller carry back financing can complicate a 1031 exchange transaction if you are planning on selling investment property and then 1031 exchanging into other like-kind replacement property.

You can learn more about this strategy and the related complications at http://www.exeter1031.com/seller_carry_back_financing.aspx.

Why Would You Use A Reverse 1031 Exchange?

The real estate market has changed considerably over the last few years, especially the residential real property market. The amount of real property inventory on the market has increased significantly because properties are taking much longer to sell. And, the market is also showing an increase in the number of properties that are falling out of escrow, therefore creating additional obstacles for 1031 Exchange transactions.

Real estate markets like this make planning, structuring and coordinating 1031 Exchange transactions even more challenging. It can also make you feel like you have lost control of your 1031 Exchange, especially if you have already lined up the acquisition of your like-kind replacement property and are having difficulty getting buyers excited about purchasing your relinquished property.

It's Time to Regain Control of Your 1031 Exchange

Fortunately, help is available. There is a 1031 Exchange strategy that can alleviate some of the risks associated with structuring your 1031 Exchange transaction in challenging real estate markets such as this.

It's called a Reverse 1031 Exchange.

The Reverse 1031 Exchange can help put you back in the drivers seat and in control of your 1031 Exchange transaction. The Reverse 1031 Exchange allows you take as much time as you need to locate and acquire suitable like-kind replacement property first with out worrying about the 1031 Exchange deadlines associated with a Forward 1031 Exchange.

One of the most difficult challenges with a Forward 1031 Exchange is meeting the required 1031 Exchange deadlines. However, when you acquire your like-kind replacement property first through a Reverse 1031 Exchange your 45 calendar day identification period is generally not an issue.

Reasons to Use a Reverse 1031 Exchange

There are many reasons why you might find yourself in a position where you must acquire or would prefer to acquire your like-kind replacement property first before the sale of your relinquished property using a Reverse 1031 Exchange. Some of the reasons include:

Perhaps you just want to eliminate the stress (and risk) involved with the stringent and restrictive 1031 Exchange deadlines by taking advantage of the Reverse 1031 Exchange strategy and acquiring your like-kind replacement property first.

Or, you might unexpectedly stumble upon an investment opportunity that you must acquire and close on before you even have time to consider selling your relinquished property.

The sale of your relinquished property may unexpectedly collapse and you may not want to risk losing your like-kind replacement property and must therefore proceed with the acquisition.

Institutional investors often structure each and every acquisition as a Reverse 1031 Exchange and then subsequently decide whether they will sell and match any relinquished properties as part of their Reverse 1031 Exchange. Many investors have switched to this strategy exclusively in order to provide them with more flexibility when structuring real estate acquisitions.

It Can Also Reduce Your Risk

Regardless of your reason, you can reduce your risk by using the Reverse 1031 Exchange because you acquire your like-kind replacement property first, and then you have 45 calendar days to identify which relinquished property you intend to sell, and you have another 135 calendar days for a total of 180 calendar days to complete and close on the sale of your relinquished property.

Once you have acquired and "parked" title to your like-kind replacement property with your Qualified Intermediary or Accommodator you only have to worry about selling your relinquished property within the prescribed 1031 Exchange deadlines.

And, should your relinquished property not sell or close prior to the end of your 180 calendar day deadline, you do not have any income tax consequences to worry about because your relinquished property has not been sold! The Reverse 1031 Exchange would be collapsed and you will end up owning both properties, but you will not have any income tax liabilities to worry about since you have not sold your relinquished property.

You can learn more about Reverse 1031 Exchanges by reading our articles entitled Overview of Reverse 1031 Exchanges and Introduction to Reverse 1031 Exchanges for more complete and in depth information on Reverse 1031 Exchange transactions.

The Exeter Group Real Estate Talk Radio Show for November 19, 2007

The Exeter Group Real Estate Talk Radio Show is live each and every Monday from 12:00 noon to 1:00 PM Pacific Standard/Daylight Time. Here are the topics to this Monday's show.

Monday, November 19, 2007

Don Meredith, Director of West Coast Operations, Concorde Exchange Group returned to discuss commercial real estate, the state of the commercial real estate market versus the residential market, and TIC investment property interests.

Baxter Scruggs, managing partner, San Diego Mortgage Network joins us again to update us on the current state of the mortgage finance industry and will provide us with some useful tips in dealing with the current financial market conditions.

Click here to listen live this coming Monday.

Small Business Administration (SBA) Offers Disaster Assistance for California Fire Victims

The SBA provides various types of loans for businesses of all sizes and homeowners and renters in the event of a disaster such as the California wildfire disasters. This includes physical disaster loans, economic injury loans, military reservists' loans and home and personal property loans. Included is the contact information for the SBA's field offices, customer service center and process and disbursement center. Read more.

Treasury Inspector General Issues Audit Report on 1031 Exchanges

The Treasury Inspector General has completed an internal audit at the IRS over 1031 Exchange administration. The Treasury Inspector General has issued his report and has recommended that the IRS significantly increase its supervision and review of 1031 exchange transactions, do a better job of defining vacation property and second homes and their qualifications under the 1031 exchange, and revamp and clarify its Form 8824 for use in reporting 1031 exchanges. You can download a copy of the report at: http://www.exeter1031.com/irs_code_regulations_rulings.aspx.

The Exeter Group Real Estate Talk Radio Show for November 12, 2007

The Exeter Group Real Estate Talk Radio Show will be discussing whether selling property and just paying the taxes might be a better strategy for you with Jim Shaw, president and chief executive officer, CapHarbor, LLC. He joins us to break down the commercial real estate markets, including a discussion on tax rates and whether it is a good time to take your chips off the table and just pay the taxes or continue to invest and defer your income taxes via a 1031 exchange.

And, we will be discussing title insurance issues with Dwight S. Helmer, Esq., who is a California Attorney-At-Law. He has been in the title insurance industry since 1972 and has considerable experience as a senior title insurance underwriting attorney. Dwight joins The Exeter Group for the first time to bring his title insurance expertise to our listeners. This is your chance to call in with questions that have stumped you about title insurance underwriting issues.

You can learn more about The Exeter Group Real Estate Talk Radio Show at http://www.exeter1031.com/radio_topics_show_dates.aspx.

Summary of Tax Relief Provisions for California Wildfire Disaster Victims

We have just completed the next edition of The Exeter Exchange Newsletter with a concise summary of the tax-relief provisions available to the victims in the Southern California Wildfire disaster.

You can download your copy at http://www.exeterco.com/pdfs/The_Exeter_Exchange_Newsletter_Volume_One_Issue_2.pdf or call (866) 393-8377 for you hardcopy.

The Exeter Group Real Estate Talk Radio Recorded Shows

You can listen to prior recorded versions of The Exeter Group Real Estate Talk Radio Show at http://www.exeter1031.com/radio_topics_show_dates.aspx.

Revisiting Year-End Planning for Failed 1031 Exchanges

It seems like it was just January 2007. Where did 2007 go? We have less than two months to go before we celebrate the new year, so it is now time to discuss year-end tax planning for 1031 exchange transactions that have failed.

What happens when a 1031 exchange starts toward the latter part of 2007, but fails because the investor could not find and identify suitable like-kind replacement property or was not able to actually acquire the property identified?

Failed 1031 exchanges become taxable. The question is in which year is the depreciation recapture and capital gain recognized and taxable? The answer depends on when the investor has the legal right to access the 1031 exchange funds.

If the 45 calendar day identification period and/or the 180 calendar day exchange period end in the following income tax year and the Tax Deferred Exchange Agreement contain the appropriate language, the depreciation recapture would be recognized and taxable in the year of sale and the capital gain would be recognized and taxable in the following year when the investor has the legal right to access the funds.

Learn more at: http://www.exeter1031.com/articles_failed_1031_exchange.aspx.

Time to Change the Clocks: Day Light Saving Time Ends

Don't forget to change your clocks tonight. We "fall back" by one hour.

IRS extends 45 and 180 Day 1031 Exchange Deadlines for 2007 Southern California Wildfire Disaster Victims

The IRS has announced tax relief for victims of the 2007 California wildfire disaster that includes the extension of 1031 exchange deadlines or due dates if the deadline begins on or after October 21, 2007.

Your 45 calendar day identification period and your 180 calendar day 1031 exchange deadline will be extended to January 31, 2008 as long as your are located in one of the affected seven (7) Southern California counties.

You can read the full IRS press release at http://www.exeterco.com/news_irs_issues_tax_relief_2007_california_fire_victims.aspx for complete details.

Mr. Exeter to be featured on The Financial Advisors Talk Show

Mr. Exeter will be a featured guest expert on The Financial Advisors' Money Talk Radio Show, which is live each and every Saturday morning at 7:00 AM to 9:00 AM on San Diego News and Talk Radio AM 600 KOGO with host Aubrey Morrow, CFP, with Financial Designs, Ltd.

Mr. Exeter will be discussing the various tax relief efforts announced by the IRS and the California FTB for the California wildfire disaster victims.

Rand Sperry, president and chief executive officer, Sperry Van Ness will be the special guest expert with Mr. Exeter.

Call ins are welcome, so call (800) 600-KOGO with your commercial real estate and/or 1031 exchange related question and get an expert to respond on the air. You can visit the following website to learn more and listen live via the internet: http://www.exeter1031.com/Seminars.aspx for more complete details.

California Wildfire Victims: Insured vs. Uninsured Losses

Uninsured Losses

Uninsured disaster victims can use the Federal Emergency Management Agency (FEMA) appraisal of their loss to document their tax loss. No loss can be taken until reimbursement claims have been settled. The measure of the loss is the lesser of the decline in fair-market value or adjusted basis, not replacement cost.

The IRS and the California Franchise Tax Board will allow victims to receive additional and immediate tax refunds this year by immediately reporting their disaster losses through amended 2006 returns.

Insured Losses

Insured disaster victims often value their personal property at replacement cost because that is the number insurance companies often use. While the IRS will want to limit the value to thrift store values, the courts have allowed taxpayers to rebut that assumption and prevail.

Insured disaster victims may have an economic loss if their insurance companies won't settle with them for the replacement cost of their real and personal property. They generally don't have a tax loss because the depreciated value of their contents is less than their insurance settlement proceeds. Policy reformation is possible and disaster victims should work with organizations such as CARE and United Policy Holders to ensure a fair settlement.

You can go to http://www.exeter1031.com/income_tax_relief_for_victims_wild_fires.aspx for more complete details regarding tax relief for the California Wildfires.