5th Anniversary Edition!
It's our Anniversary!
Today, July 1st, marks five years since Beutler Exchange Group opened for business! In that time, we have overseen over 4,500 exchanges, with our average numbers growing each year. This year alone, sales prices in our exchanges have ranged from $75k to $255m. Since 2014, Beutler Exchange Group has grown from just Toija and Karen facilitating, to a team of seven. Our small team allows us to work closely together and provide more in depth service to our clients. Of course, we wouldn’t be where we are today without your support! Thank you for being a part of our story. We are so excited to see where the next five years will take us!
Ten Stupid Things Smart People Do
To Mess-Up Their 1031 Exchange
(With apologies to David Letterman)
Toija Beutler, Attorney
Number - Ten!
They think reverse exchanges are as easy as forward exchanges.
Reverse exchanges require ownership of a property to be “parked” with the exchange company - SO much more complicated than a forward exchange.
Number - Nine!
They plan to exchange with their share of a partnership - or membership interest in an LLC.
1031 is only available for interests in real property. A partnership/membership interest is a personal property interest - not eligible.
Number - Eight!
They plan to buy from Mom (or Sis or Bro).
With very limited exception, buying from a related party is not permissible.
Number - Seven!
Their tenant is their daughter and she has been covering the mortgage.
Case law has made it clear that, if the property is going to be the subject of an exchange, the family member needs to be paying fair market rent, not just the mortgage.
Number - Six!
They plan to talk to their tax advisor at tax time.
Only the tax advisor knows if the Taxpayer even needs an exchange. Often times they don’t.
Number - Five!
They call the exchange company when they think they have everything sorted out. (Or, they don’t call at all.)
There are so many exchange rules. Navigating those successfully requires early and full consultation with exchange professionals.
Number - Four!
They think the exchange deadlines get extended to the next business day.
1031 deadlines are the only tax deadlines that do not get an extension.
Number - Three!
They are moving too fast when they complete their identification form.
Transposing addresses; omitting the city and state; not describing the fractional interest, etc.
Number - Two!
They think if they sell a rental house they have to buy a rental house.
The only good rule in 1031 is the like kind rule. All real estate is like kind with all other as long as what is being sold and bought are residential rentals, commercial properties or investment land. Rental house for commercial. Investment land for residential rental. And so on.
Number - One!
They think they just have to reinvest their cash.
There also exists the requirement to obtain replacement debt equal to, or greater than, the debt on the relinquished property. So, the basic rule is cash plus debt.
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