Category Archives: 1031

California Franchise Tax Board Denies 1031 Exchange

The California FTB (Franchise Tax Board) has gotten more aggressive challenging 1031 exchanges. A practice that has been and is commonplace has just caused a taxpayer to have his exchange disallowed.  It used to be that a partial distribution of funds held by the QI (qualified intermediary) was considered boot with resultant capital gains taxes due…

Will IRS Section 1031 be Repealed?

Section 1031 has been around since 1921, but will it make it to 2021?  There are serious moves in congress underway to dramatically scale back or repeal the section on like kind 1031 exchanges and not just from Democrats. As many folks know, IRS section 1031 allows an investor to defer the recognition of capital…

Net Lease Retail Cap Rate Compression for First Quarter 2014

Cap rates fell 40 basis points and net lease retail product quality also falls in the first quarter of 2014. We’re thinking retail right about now as the national ICSC Global Retail Real Estate Convention is just around the corner running through May 18-20 and over 30,000 net lease retail professionals converge on Las Vegas….

1031 Exchange – Retail – Client Requirement $1.6 to $3.2 Million

IRS Section 1031 need for replacement property. Exchanger in day 4 of 45 day identification period from closing relinquished property looking for triple net retail or absolute net retail, $1.6 mil to $3.2 mil. Exchanger prefers California triple net commercial real estate for sale , but will consider out of state. Must be credit tenant,…

Client Need for Net Leased Retail – 1031 exchange – 45 Identification Period

IRS 1031 Exchanger in 45 Identification period looking for $3.5 to $5 million, national credit, preferably single tenant, NNN, triple net retail with at least seven unexpired years left on net lease.  Prefer absolute net.  No gas or 7 Eleven.  Fast food and fast casual fine if corporate lease or large franchise. Looking West Los…

Los Angeles Commercial Real Estate for sale or Lease

It probably goes without saying, if you’re interested in Santa Monica or Los Angeles commercial real estate for lease, especially in the project I just posted, contact me because the net leased commercial retail space available will be leased up quickly. I’ll be happy to be your Los Angeles commercial real estate agent.  Good Los Angeles…

1031 Exchange Rules

Rule # 1 Both the relinquished property and replacement property must be held for investment purposes or used in a business and be ‘like kind’. Rule # 2 The IRS requires the investor to identify the replacement property or properties within the 45 day ‘identification period’. The identification period begins the day of closing of the…

IRS Section 1031 Exchange Basics

Since we’re getting into tax season, I’m getting more calls over the last few days regarding the basics of a 1031 delayed or reverse exchange so I thought it best to review some of the most important aspects of  a 1031. This allows investors to use all of the sale proceeds to leverage into more valuable…

1031 Exchanges and the 3.8% Net Investment Tax – IRS Section 1411 regs

1031 tax deferred exchanges under IRS section 1031 of the Internal Revenue Code allow real estate investors to defer taxes that would be due if the property was sold instead of exchanged. If the investor decides not to participate in a 1031 exchange, the taxes potentially and likely owed would include the following: A) depreciation…

1031 Exchange – Due Diligence Selecting a Qualified Intermediary

I haven’t written much about 1031s over the last year or so, but given the 50% increase in capital gains taxes in many circumstances and the 3.8% Net Investment Tax, there’s been a 50% increase in 1031 exchanges over the last year.  I think the number would be even higher if it weren’t the fact…

2013 Commercial Real Estate Review

It’s that time of the year again when everyone and their mother posts their yearend review for 2013 and/or forecast for next year, 2014.  I’m not going to do that, but instead linked is Deloitte’s 2014 commercial real estate forecast, which is long, detailed and usually fairly accurate.  I will summarize and editorialize a bit…

Single Tenant Triple Net Retail Investment Property Becoming More Available

As interest rates climb just a bit and cap rates are at what’s likely to be a cycle low, I’m seeing more new or newer developer owned, single tenant, triple net retail or absolute net, national credit, leased investment properties coming on the market.  The availability of construction funding and newly built property coming on…

1031 Exchanges and Fair Market Rent

A U.S. Tax Court decision from earlier this year, Adams v. Commissioner, T.C. Memo 2013-7, illustrates the importance of the investor / tax payer receiving a fair market rent for their investment property.  In the above case the tax payer exchanged into a replacement property that was rented at slightly below market rents to the…

1031 Exchanges – October 18 to December 31 2012

This is review and reminder to a post earlier in the year. A 1031 exchanger must complete the acquisition of a replacement property in a 1031 exchange before midnight on the earlier of the 180th day after the date the relinquished property was transferred, or the due date (including extensions) for the income tax return for…

IRS Issues Proposed Regs on 3.8% Medicare Tax on Net Investment Income

The IRS has issued Proposed Regulations, REG-130507-11, regarding the new 3.8% Medicare tax on net investment income imposed by IRS Section 1411. The proposed regulations affect individuals, estates and trusts.

NAR Commercial Real Estate Outlook for August 2012

The National Association of Realtors sums it up pretty well in the attached August 2012 Commercial Real Estate Outlook when they opine that the economy has gone on vacation.  That’s pretty much how I would describe it too.  True, the triple net or absolute net, single tenant, national investment grade credit tenant retail is still…

Commercial Real Estate Pricing Recovery Continues

Walmart Market Center

I’m not saying that we’re quite back to pre crash levels of pricing but we’re getting there.  Given the general malaise in the American economy with job growth, GDP growth and most other indicators, it’s surprising that the commercial real estate recovery has been as strong and broad based as it has. It didn’t start…

Triple Net Retail Investors Looking at Class B Properties

7- Eleven, triple net retail property for sale

7I’ve been writing about this topic for most of the last 18 months.   There is very little supply out there of the triple net or absolute net, single tenant, national credit retail opportunities, and that is of course what everyone wants.  And what is available gets highly competitive and results in multiple offers and stupid…

1031 Exchange Tax Court Case

1031 Exchanges

There’s a relatively new U. S. Tax Court case Reesink v. Commissioner, (April 23, 2012) T.C. Memo 2012-118, that could be of interest regarding a 1031 exchange. The Reesinks, husband and wife, purchased a residential residence for investment purposes to use as a residential rental. The Reesinks after much effort over a period of eight…

Triple Net, Single Tenant, Single Parcel Retail

Today, I’m going to take a look at the preferred type of product for most of my buyers, and frankly for most buyers on the market these days, and that is triple net or absolute net, single tenant, single parcel, corporate leased  retail.   We’re talking the Wal-Mart’s, Kohl’s on the large end.   Walgreens and CVSs…