iowa exchange: Iowa Farmland Value Report - 03/12/09 04:50 PM
In a further confirmation that values have peaked at least for now, the REALTORS® Land Institute semi-annual survey shows a 7.6% drop in the price for farmland over the six months ending February 28 of this year. This survey is conducted every six months and consists of input from the state's farmland real estate community. The previous survey indicated an increase of 6.6%. The previous twelve months, therefore, show approximately a 1% drop in values.
No one is necessarily panicking about this drop or leveling off, however. According to Troy Louwagie, REALTOR® with Hertz Farm Management and also the spokesman for … (2 comments)

iowa exchange: Have Iowa Farm Land Values Peaked? - 03/06/09 04:28 PM
In what could hardly be termed a surprise, the Des Moines Register reported on February 21, 2009 that farm land values in Iowa declined 6% during the final quarter of 2008 according to the Federal Reserve Board of Chicago. This is the first such drop in a decade. The primary contrbuting factor is the sharp decline in commodity values since the summer, in many cases as much as a 50% drop.
The 6% drop in Iowa was discovered during a survey of 209 banks in the upper Midwest, including not only Iowa, but Indiana, Illinois, Wisconsin and Michigan as well. Iowa's … (2 comments)

iowa exchange: Is the Term "Like-Kind" Confusing to You? Here's a Simple Explanation - 03/02/09 04:35 PM
Does it confuse you when you hear that property in an exchange must be exchanged for "like-kind" property? In the talks that I give to real estate agents, investors, attorneys and accountants, I think I've hit on an easy way to determine whether or not the property being sold is like-kind to the property being purchased.
Before getting into the details, let's first establish that virtually all real estate is like-kind to virtually all other real estate. That makes it pretty simple, doesn't it? But there is one major qualifier. Property in an exchange must have been "held as an investment … (0 comments)

iowa exchange: The Top Ten (Actually, Eleven) Reasons People Use Section 1031 Tax-Deferred Exchanges - 02/12/09 07:50 PM
learly, the overriding reason is the ability to defer payment of capital gain taxes, including the recapture of depreciation. With depreciation recapture at 25% (or more, depending upon the type of depreciation taken and the period over which that depreciation was taken) and federal capital gain tax at 15%, plus state capital gain taxes (depending upon the state, of course), taxes can easily account for 30% or more of the gain recognized. But there are other reasons that taxpayers exchange. Most exchanges have secondary reasons for exchanging in addition to tax deferral. Among those reasons are:
Consolidation. Example - taxpayer owns … (0 comments)

iowa exchange: To Combine or Not to Combine - That is the Question - 02/04/09 04:33 PM
What the title of this blog refers to is whether or not it makes sense to sell or buy more than one property in a single Section 1031 tax-deferred exchange. First we must establish the fact that more than one property can be sold and/or purchased within one 1031 exchange. In other words, I can sell two or more properties and combine those sales into one exchange, out of which I can buy one replacement property. Likewise, I can sell one property and buy two or more properties as my replacement property in an exchange. Or I can sell two or … (2 comments)

iowa exchange: The Power of the Section 1031 Tax-Deferred Exchange - Free Spreadsheet - 01/29/09 01:44 PM
Here's another spreadsheet for your entertainment and enlightenment. If you've been following this blog for awhile, you may remember an earlier spreadsheet that compared buying and holding a property for ten years to buying the same property, holding it for five years, exchanging into another property, and holding the new property for another five years.
This new spreadsheet takes a little different approach. Its purpose is to compare the value of exchanging to simply selling and reinvesting without the benefit of an exchange.
Remember, there are four sources for income/profit from a real estate investment:
Cash flow before taxes Tax benefits … (2 comments)

iowa exchange: Apartment Sales Report - Des Moines, Iowa - 01/27/09 04:30 PM
I hate negative news. But facts is facts. When it comes to the sale of apartment properties in the Des Moines market, there's not a lot of positive news right now. If you only want positive news, skip to the last paragraph and I'll give you the best spin I can come up with.
According to Rick Krause, Senior Associate with CBRE Richard Ellis/Hubbell Commercial, sales transactions involving apartment buildings in Polk County were down 48% in 2008 compared to 2007. Dollar volume was down an even higher percentage: 62%. This information comes from Rick's self-published monthly newsletter, the Central Iowa Income … (2 comments)

iowa exchange: Liquidity of funds - doesn't sound exciting? Read on... - 01/22/09 12:41 PM
What could be more exciting than a discussion of the liquidity of funds, right? Okay, so it sounds pretty dry. Let me try to explain why it's actually of critical importance.
In my opinion, the cornerstone responsibility that a Qualified Intermediary has to his client is to protect the client's money while it's in the QI's possession. If the QI does something that makes it so his client's money isn't available when it's needed, or isn't worth as much as it was when it was transferred to the QI, then it really doesn't matter how well the QI prepared the documents, … (0 comments)

iowa exchange: Section 1031 Exchanges and the Auction Industry (Part 3) - 01/14/09 01:57 PM
In the summer of 2008, I was honored to be asked to author an article for The Auctioneer, the official publication of the National Auctioneers Association, on the subject of Section 1031 exchanges and their application within the auction industry. The article was published in the September 2008 issue. If you would like to access the article online, it can be found on pages 62-64 of this link: The Auctioneer. The article is reprinted in three blog entries; this is the third of the three. (Part 1 can be found here; Part 2 here.)
What is the difference between the exchange … (3 comments)

iowa exchange: Section 1031 Exchanges and the Auction Industry (Part 2) - 01/14/09 01:34 PM
In the summer of 2008, I was honored to be asked to author an article for The Auctioneer, the official publication of the National Auctioneers Association, on the subject of Section 1031 exchanges and their application within the auction industry. The article was published in the September 2008 issue. If you would like to access the article online, it can be found on pages 62-64 of this link: The Auctioneer. The article is reprinted in three blog entries; this is the second of the three. (Part 1 can be found here.)
Specific questions about exchanges and auctions:
When should I … (0 comments)

iowa exchange: Section 1031 Exchanges and the Auction Industry (Part 1) - 01/14/09 01:07 PM
In the summer of 2008, I was honored to be asked to author an article for The Auctioneer, the official publication of the National Auctioneers Association, on the subject of Section 1031 exchanges and their application within the auction industry. The article was published in the September 2008 issue. If you would like to access the article online, it can be found on pages 62-64 of this link: The Auctioneer. The article is reprinted in three blog entries; this is the first of the three:
 
The purpose of this article is to provide basic information about Section 1031 exchanges and … (0 comments)

iowa exchange: Section 1031 Exchanges - The Basics (Article #3) - 01/14/09 12:19 PM
This is the third of three blog entries about the basics of Section 1031 exchanges. The first entry can be found here, Article #1, and the second entry is here: Article #2.
Quick review... the first hurdle for the standard exchange is that the properties must qualify. Second, you must establish your intent to exchange in writing prior to closing of the property you are relinquishing. Third, you must identify the property you intend to purchase using the guidelines allowed. Moving on to the final requirement...
#4 - Acquire the replacement property. Again going back to the date of closing of … (0 comments)

iowa exchange: Section 1031 Exchanges - The Basics (Article #2) - 01/14/09 12:07 PM
This is the second of three blog entries about the basics of Section 1031 exchanges. The first entry can be found here: Article #1
Quick review... the first hurdle for the standard exchange is that the properties must qualify. Moving on...
#2 - Establish your intent to exchange. Now that you have determined that the property you are selling and a property you can envision buying will qualify, you must enter into a written agreement with your exchange company to establish your intent to exchange. This must be done prior to the closing of the sale of your property. At closing, … (0 comments)

iowa exchange: Section 1031 Exchanges - The Basics (Article #1) - 01/14/09 11:50 AM
I was recently asked to write a short article for a local publication about the basics of Section 1031 exchanges. Over the time I've been here at activerain, my blog topics have covered a wide range of exchange-related topics, including the basics. However, it has been a long time since I've addressed that basic information. Writing the article caused me to realize that was the case, so this is an attempt to remedy that situation. With that in mind, here is the first of three blog entries having to do with the four basic hurdles for the standard 1031 exchange:
What … (0 comments)

iowa exchange: Farmland prices leveling off? - 11/24/08 10:01 AM
In an article in the Des Moines Sunday Register, author Dan Piller investigates the value of farmland in Iowa based upon the results of a number of recent farm auctions. The conclusion? Farmland values are not rising at the rate they have over the past few years. Probably not a huge revelation to those of us who keep track of things, nor a huge surprise to those of you who don't. The current macro-economic conditions in this country and the world affect farm prices just as they touch virtually every other aspect of our lives.
However, the good news is that … (2 comments)

iowa exchange: Thanksgiving Time - 11/19/08 01:34 PM
As Thanksgiving approaches, it's an interesting time in our country and the world. (Have you heard the saying, "May you live in interesting times?" I had always thought of that saying as a blessing, but it appears that it may have first started as a curse, at least if you can believe the Wikipedia entry: Wiki it.) At any rate, counting our blessings is never more common than at this time of the year. And even in this turbulent time, with our stock market imploding and taxpayer money flying around like confetti, it's still important to take stock of ourselves and … (0 comments)

iowa exchange: Exchanging Foreign Properties - 11/12/08 07:09 PM
What if you own property outside of the United States and you want to utilize Section 1031 for a tax-deferred exchange of that property? Is that okay?
The short answer is, "It depends." It depends upon where your property is located and where the property you wish to acquire is located. Essentially it comes down to "US property for US property" and "foreign property for foreign property." The reason for this is that the code does not consider non-US property to be like-kind to US property. The Virgin Islands and Guam, though, are US territories and can be exchanged for all … (2 comments)

iowa exchange: Development Rights are Like-Kind to Real Property - 11/12/08 06:17 PM
A Private Letter Ruling issued by the IRS relating to a taxpayer's intention to acquire development rights as his replacement property in a 1031 exchange is an interesting situation. In this case, the taxpayer sold a property as his relinquished property in the exchange and gave up his fee interest in that property. As his replacement property, he desired to purchase unused development rights to use on property he already owned in order to do more with the property than was allowed prior to the purchase of those rights. (See Private Letter Ruling 200805012.)
"Development rights" are one of the "bundle … (0 comments)

iowa exchange: Converting Investment Property to Personal Residence? New Limits on Gain Exclusion! - 10/17/08 03:36 PM
Do you plan to convert an investment property into your personal residence? The Housing Assistance Tax Act of 2008 that President Bush signed into law on July 30, 2008 carries a provision that affects the practice of excluding gain when you sell a property that was once used for another purpose, such as a rental property, and then converted into your personal residence. The effect of the new law is a restriction on the amount of gain you can exclude through Section 121, the personal residence exclusion section of our tax code.
Section 121 of the Internal Revenue Code allows a … (4 comments)

iowa exchange: Iowa Land Price Survey Shows 6.6% Rise in Six Months - 09/24/08 04:19 PM
A recent survey of farmland real estate brokers shows that the price of Iowa’s best farmland rose by an average of 6.6 percent from March 2008 through August 2008, cooling slightly versus the previous six month period. This survey was conducted by the Iowa Farm and Land Chapter 2 Realtors Land Institute, as it has been done every March and September since 1978. The RLI is composed of real estate brokers who specialize in farm and land sales, farm management, and appraisals. The results were cited in an article in the Sunday Des Moines Register on September 17, 2008.
Troy Louwagie, … (2 comments)