Saturday, July 26, 2014

Can a 1031 Exchange Help You?

For a lot of people, their home is their most valuable asset.  The long-term appreciation and equity in the property is likely to be their biggest investment, so the IRS allows sellers to exclude $250,000 in gains from the sale of their primary residence from taxes; $500,000 for a couple filing jointly.

For investors who use their properties to generate revenue, this exclusion is not available.  However, the IRS provides another avenue to defer the tax liability for a time by reinvesting the sale proceeds into another like-kind property, called a Section 1031 Exchange.  Business entities can also use this vehicle to protect assets.

The simplest exchange is a simultaneous swap of one property for another.  If the exchange does not happen at the same time, a qualified third party will hold the funds from the sale of the first property until they can be used toward the purchase of another.  Several rules govern this process.

First, the seller must identify, in writing, one to three replacement properties within 45 days of the closing of the sale.  All three properties may be purchased in exchange, or they can be treated as back-up options should one of them become unavailable after identification.  The purchase of the replacement property must be completed within 180 days of the initial sale.

There are other rules related to the value of the replacement homes identified and the percentage of the value that is actually acquired in the final sale.  In addition, if there is still additional money left after the purchase of the replacement property, that gain, or "boot," could be subject to taxation.  It is highly advisable to hire an exchange service to account for all funds and handle this sometimes complex transaction.  These experienced professionals can also help you make long-terms plans regarding the best way to handle or even reduce the deferred tax liability.  If you would like a referral, don't hesitate to contact me.

I would love to help you with your real estate journey. 
Please contact me at 303-917-7143 or

Friday, July 4, 2014

Colorado Ranks 6th Best for the "New Economy"

With a score of 81.4 out of 100, the Information Technology and Innovation Foundation (ITIF) has ranked Colorado in the top 10 states in the nation for the "new economy." ITIF, a nonprofit think tank, defines the new economy as, "marked by globalization, technological innovation and entrepreneurial development."

ITIF used 25 indicators in 5 categories to asses a state's ability to adapt to more a technological culture and encourage development.  The categories are knowledge jobs, globalization, economic dynamism, digital economy and innovation capacity.  The Foundation indicated that states are better focusing on high quality innovation than incentive packages to bring new companies in.  Policy makers need to support measures that prioritize retaining high-skilled workers, access to education and laboratories, and research and development.

Colorado came in 6th behind Massachusetts (#1), Delaware, California, Washington and Maryland.  Colorado's strengths were listed as workforce education, initial public offerings and high-tech jobs.  If you're looking to move here, I've helped many families get to know Colorado and find a great house in the Denver and Boulder areas.  Through listing alerts, local news articles and property previews, I'd be happy to help you with your search.

I would love to help you with your real estate journey. 
Please contact me at 303-917-7143 or