The Exeter Learning Institute

The Wealth Solution Webinar

2012-01-27T14:08:00.000-08:00

Are you uncertain how to manage your wealth? Concerned you won’t be prepared for retirement? Do you want to leave a lasting legacy for your heirs? Have you clearly defined your personal and financial goals?

The Wealth Solution webinar will show you how to:

overcome key investment challenges
demystify the investment planning process
create a total investor profile and select a true wealth manager – or be your own!

Presented by:

Josh Koehnen, MsBA, CFP®

CERTIFIED FINANCIAL PLANNER™ practitioner

Hosted by:

William L. Exeter

President and Chief Executive Officer

Exeter 1031 Exchange Services, LLC

Happy New Year!

2012-01-01T13:47:00.000-08:00

The Exeter Learning Institute's team of 1031 Exchange Experts and Advisors would like to wish each and everyone of our readers a very Happy, Healthy and Prosperous New Year.

Did You Buy Substantially The Same Property That You Identified In Your 1031 Exchange?

2011-07-29T17:36:00.000-07:00

I know, I know. You are wondering what I've been drinking. But, this is a real issue. In fact, It is a really critical issue when you are being audited.

It does in fact come up during income tax return audits, especially when the California Franchise Tax Board is the audit agency. The California Franchise Tax Board has been taking very hard look at just this issue. We've been brought in as 1031 Exchange experts on audit cases for this very issue.

Actual Case Study
Let's look at an audit case that we recently consulted on. The investor/taxpayer sold a property ("relinquished property") and structured a 1031 Tax Deferred Exchange transaction. The investor/taxpayer identified his intended purchase ("replacement property") within the required 45 calendar day identification period.

His identification read like this: 12345 Main Street, Anytown, CA 92345

He made an offer, which was accepted, to buy an undivided ten percent (10%) interest in his identified property, and he actually closed on the purchase of the fractional interest well within his 180 calendar day exchange period.

Acquiring Substantially The Same Property
The issue is this, by identifying the property as 12345 Main Street, he has effectively identified 100% of the property as his intended replacement property. However, he only acquired a ten percent (10%) interest in the property.

The question then becomes, did he actually acquire substantially the same property as the property that he identified if he only acquired ten percent (10%) of what he actually identified.

I know, I know, this is like splitting hairs. But, the California Franchise Tax Board is taking this very position right now. They have disqualified the 1031 Exchange under audit because he did not acquire substantially the same property that he identified.

Investors/taxpayers structuring 1031 Exchanges must be very, very careful when identifying their intended like-kind replacement properties so that they do not run afoul of the hyper-critical taxing authorities today.

What Exactly Is A Self-Directed IRA?

2011-07-23T20:40:00.000-07:00

I just spoke with a taxpayer that asked, "Well, what exactly is a self-directed IRA. This is actually a very good question; one that is often very misunderstood, because all individual retirement accounts or IRAs are self-directed!

Self-Directed IRAs Allow Alternative Investments
The retirement services industry has loosely used the term self-directed IRA to describe IRAs that allow the taxpayer/investor to buy "alternative investment" such as real estate, Deeds of Trust, Mortgages, Tax Lien Certificates, and more, inside of their IRA.

All IRAs Are Self-Directed IRAs
However, the taxpayer/investor always chooses what financial institution to place their individual retirement account with, so they are ALL self-directed IRAs. The taxpayer/investor can choose to open, transfer, withdraw and close their IRA at, to or from any institution they wish to work with. So, you can see that all IRAs are self-directed IRAs.

IRA Custodians or Trustees Are The Key
The real difference is the investments that an IRA Custodian or Trustee will allow the taxpayer/investor acquire inside of their IRA. The majority of financial institutions do not permit "alternative investments," but there are about ten or so nationwide that do so. So, the key is to identify the right IRA Custodian to suit you.

1031 Exchange Basic Webinar by Bill Exeter (On Demand)

2011-07-21T13:26:00.000-07:00

William L. Exeter, President and Chief Executive Officer of Exeter 1031 Exchange Services, LLC has over 30 years of experience in the fiduciary services industry and is a renowned real estate tax strategist.

Mr. Exeter joins Silver Stream Advisors’ President Gregg Wood and his team of real estate experts to bring you a brief education on buying real estate using 1031 Exchange strategies Mr. Exeter will provide you a greater understanding of what 1031 Exchanges are all about and how to invest using 1031 Exchanges, while Mr. Wood will discuss how Silver Stream Advisors’ trademarked Real Estate Money Machine™ investment model will grow your retirement and take advantage of the incredible investment opportunity in real estate.

Both Mr. Exeter and Mr. Wood are committed to providing investors the highest levels of experience, expertise and security of funds in the industry.

Join us for this on demand webinar.

Watch Now

This webinar will teach you:

What a 1031 exchange is
How to sell & reinvest using a 1031 exchange
1031 exchange strategies and requirements
How to regain control of your retirement using Silver
Stream Advisors investment opportunities
Tax strategies of the wealthy

For those prepared with the right tools, there has never been a better time to invest in real estate. Learn the secrets of the rich to control their financial future. We look forward to seeing you there.

Watch Now

Is Your LLC Really a Single Member LLC?

2011-07-20T13:40:00.000-07:00

Limited Liability Companies or LLCs are all the rave today for acquiring, holding, managing and disposing of real estate. They are easy to form, easy to administer, and easy to deal with for income tax purposes, especially if the LLC is a single member LLC ("SMLLC").

Single Member LLCs Have One Member
Single member LLCs are Limited Liability Companies that have one and only one member (owner) for tax purposes. LLCs that have a husband and wife as the sole members may still be treated as a single member LLC if they live in a community property state and file a joint income tax return.

The single member LLC generally uses the Taxpayer Identification Number ("TIN") or Social Security Number ("SSN") of the sole member, but can apply for its own separate TIN if it so chooses.

Single Member LLCs Are Pass-Thru and Disregarded Entities
Single member LLCs are not only treated as pass-thru entities (income tax consequences inside of the LLC pass-thru to the sole member's income tax return) but are also treated as disregarded entities (SMLLC is ignored as if it does not exist for income tax purposes). The assets held (owned) inside the single member LLC are treated as if they are owned directly by the sole member for income tax purposes.

However, since they are generally so easy to administer it also means they are easy to screw up, especially because most taxpayers do not fully understand how the single member LLC should be treated and/or reported.

I think the vast majority of those taxpayers who set-up limited liability companies intend to use, treat and report the LLCs as single member LLCs, but it is truly amazing how many accidentally end up as something other than single member LLCs.

Most Common Mistake Made
The most common mistake made with single member LLCs is when tax return preparation time comes around. Generally, tax consequences from a single member LLC should be reported on the sole member's income tax return since the single member LLC is a pass-thru entity and a disregarded entity.

Partnership Treatment; No Longer Single Member LLC
However, the taxpayer and/or his or her tax advisor all too often incorrectly file IRS Form 1065, which is a partnership income tax return. There are many reasons used to "rationalize" why this was done, often for administrative convenience, but in the end Filing IRS Form 1065 effectively serves as an election by the taxpayer to treat the LLC as a partnership rather than a single member LLC.

The LLC is still a pass-thru entity, but it is no longer a disregarded entity. The LLC is now treated as a partnership and is now considered a completely separate and distinct legal entity from the taxpayer. The taxpayer will receive a K-1 from the partnership.

Complications For 1031 Exchanges
Why am I discussing this issue on my blog where I usually talk about 1031 Exchanges? It absolutely affects the successful outcomes of 1031 Exchanges when there is a single member LLC involved in the sale or purchase of properties inside a 1031 Exchange.

1031 Exchange Case Study
Let's review an example of what can go wrong when what is thought to be a single member LLC actually turns out to be a LLC that has been treated and reported as a partnership.

Taxpayer owns property in a LLC. Taxpayer is the sole member of the LLC and therefore assumes that the LLC is a single member LLC. Taxpayer tells the Qualified Intermediary that the LLC is a single member LLC and that Taxpayer will be buying his or her replacement property in the same single member LLC.

The Qualified Intermediary drafts the 1031 Exchange documents listing the single member LLC as the Exchangor (taxpayer/seller) for the relinquished property and the sale closes.

The Taxpayer discovers that his or her lender will not lend to the LLC, so the Taxpayer is forced to acquire the replacement property in his or her individual name. The replacement property closes and the legal title is in fact deeded (conveyed) into the Taxpayer's individual name and not the LLC.

Generally, this would still qualify for tax-deferred treatment in a 1031 Exchange if the LLC is considered a single member LLC because it is a disregarded entity and the property owned by the LLC is treated as if it is owned by the underlying Taxpayer who is the sole member of the LLC.

However, if the Taxpayer had actually been filing IRS Form 1065 for the LLC, then the transaction may not qualify for tax-deferred exchange treatment because there would be two different entities involved in the transaction. The sale would have been closed in a partnership's name and the subsequent purchase of the replacement property would have been closed in the individual's name. The partnership and the individual are completely different taxpaying entities.

Remember, properties must be sold and acquired by and in the name of the same taxpaying entity in order to properly structure a Tax-Deferred Exchange pursuant to Section 1031 of the Internal Revenue Code and the California Franchise Tax Board.

California Franchise Tax Board Audit
I have been involved as an expert witness in two (2) transactions that were audited by the California Franchise Tax Board and in one (1) that was audited by the Internal Revenue Service.

The issues and outcomes described above are the exact positions taken by the California Franchise Tax Board and the Internal Revenue Service. Owners intending to use single member LLCs need to consult with their legal and tax advisors to ensure they are in fact treating, reporting, administering and documenting their LLCs as single member LLCs.

Amy Sotereanos Joins Exeter 1031 Exchange as Affiliate

2011-07-06T19:17:00.000-07:00

Exeter 1031 Exchange Services, LLC issued a press release regarding Amy Sotereanos joinning its national 1031 Exchange Services Group as a 1031 Exchange Consultant. She is based out of the Pittsburgh, Pennsylvania Affiliate Office.

Amy Sotereanos has over ten (10) years of professional real estate experience in the areas of 1031 Exchanges and commercial real estate escrow services. Mrs. Sotereanos was formerly the National Operations Manager for U.S. National 1031 Exchange, Inc. (formerly Mid-Exchange, Inc.).

The Pasadena Economic Symposium for Wealthy Investors

2011-04-24T11:25:00.000-07:00

Experience an incredible eight hours in Pasadena, California exploring the latest in investment opportunities, insights into what may be the future of the financial markets and our country, strategies to potentially reduce taxes and increase cash flow, and much, much more. Over fourteen (14) speakers will cover topics such as... Click Here to Learn More

Money Minded Learning for Teenagers!

2011-04-19T13:33:00.000-07:00

Finally, a financial program for teenagers! This is truly a program whose time has come. I've seen way too many young adults, as well as mature adults, who really have absolutely no clue when it comes to managing their own finances. Here is a program that is truly targeted toward teenagers to help them learn how to manage their own money.

Tax Benefits With GO Zone Investment Real Estate

2011-04-04T08:52:00.000-07:00

Real estate investors often defer payment of their capital gain and depreciation recapture taxes through a 1031 Exchange. The more difficult decision is what, where and how to buy replacement properties during these challenging times. You might want to consider taking advantage of available tax incentives by investing in the GO Zone.

Gulf Opportunity Zone Act of 2005 ("GO Zone")

The passage of the Gulf Opportunity Zone Act of 2005, and the subsequent extension passed in 2010, provides investors with significant tax benefits, including bonus depreciation, for real estate acquired within the GO Zone designated areas.

"Learn About Bonus Depreciation by Investing in GO Zone Properties"

Learn how you can receive bonus depreciation, rehabilitation credit and demolition deductions by investing in real estate located within the GO Zone.
Understand the how and why of the Gulf Opportunity Zone Act of 2005.
Learn how you can 1031 Exchange into GO Zone investment properties.
Hear how the Hanover Companies can help you invest throughout the GO Zone territory with their GO Zone Real Estate Opportunities.

Go To Webinar Registrations Are Required

Click here to register for this GO Zone Investment webinar.

The 1031 Exchange Group on LinkedIN

2011-03-15T19:08:00.001-07:00

There is a LinkedIN Group specifically for investors, their advisors, as well as related professional advisors for the purpose of discussing 1031 Exchange ideas, strategies, successes, failures, problems and solutions. It's The 1031 Exchange Group.

Happy Valentines Day

2011-02-14T08:10:00.001-08:00

The team at The Exeter Learning Institute would like to wish each of you a very Happy Valentines Day.

California Requires Solar Energy Options for New Homes

2011-01-22T11:42:00.000-08:00

A new California law requires homebuilders to begin providing optional solar energy systems to homebuyers. California Public Resources Code Section 25405.5 often referred to as "The “Mandatory Solar Option Law", went into effect on New Year's Day, January 1, 2011.

The new law mandates that homebuilders building homes in California offer an option to homebuyers for solar energy systems in certain new production homes. Homebuilders should consult with their counsel to ensure compliance with this new regulatory requirement.

GO Zone Tax Incentives Extended to 12/31/2011

2011-01-20T11:58:00.000-08:00

Few investors are aware they can receive significant tax incentives in the form of bonus depreciation if they acquire new homes in GO Zone (Gulf Opportunity Zone Act of 2005, extended in 2010) designated areas. The deadline for investors to take advantage of the GO Zone tax incentives has been extended to December 31, 2011 and is widely expected to be extended for another year beyond that.

The majority of companies that were developing real estate in the GO Zone pulled out knowing that they tax incentives were scheduled to expire on December 31, 2010. The few who remained are well positioned to help investors take advantage of the bonus depreciation throughout 2011 and possibly 2012.

Exeter 1031 Exchange Services, LLC has scheduled a monthly webinar discussing the benefits of investing in real estate within the GO Zone. This month's guest presenter is The Hanover Companies.

Step-Up In Cost Basis Reinstated for 2010

2011-01-20T11:36:00.000-08:00

Congress passed and President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “Tax Act”) late in December.

There was been quite a bit of focus on the extension of the "Bush tax cuts", but the Tax Act also provides some much needed relief to taxpayers from the estate tax, gift tax, and generation skipping transfer tax, including a profound impact upon taxpayers that have used and continue to use 1031 Exchanges in the sale and reinvestment of real estate assets.

The Tax Act also effectively reinstates the ability to transfer property at death to a taxpayers' heirs with a step-up in cost basis. This essentially means that the capital gain tax and the depreciation recapture taxes go away at death. Taxpayers can still continue to structure 1031 Exchanges through out their lifetime in order to continually defer the payment of their capital gain taxes and then pass the property on to their heirs with out passing on the capital gain taxes.

Happy New Year

2011-01-01T01:01:00.000-08:00

Happy New Year from your friends at The Exeter Learning Institute. We look forward to a better year in 2011.

1031 Exchange Planning After the 2011 Tax Relief Act

2010-12-27T14:03:00.000-08:00

President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2011 (the "Act") into law. This new act has some very favorable income tax planning provisions that benefit owners of real estate assets, and especially for those taxpayers who have always taken advantage of 1031 Exchanges.

The Act extends many areas of former President George W. Bush's tax cuts, including lower capital gain tax rates, tax free exemptions for estate and gift taxes, as well as preserving the step-up in cost basis received by heirs at the date of death.

Capital Gain Tax Rates Extended

The current low capital gain tax rates were extended for two (2) more calendar tax years. This means that most of us will be paying capital gain taxes at the maximum capital gain tax rate of just fifteen percent (15%) through December 31, 2012, unless of course you are deferring your capital gain taxes by structuring a 1031 Tax Deferred Exchange (see Section 1031 of the Internal Revenue Code). The ability to defer capital gain taxes into the future through a tax-deferred exchange such as the 1031 Exchange is often the best strategy because it keeps your money working for you.

Depreciation Recapture and State Taxes

Don't forget to include depreciation recapture taxes and any state income or capital gain taxes in the tax planning computation or estimate. The combined Federal and state taxes are still high on a combined basis for many states, so tax planning is still extremely important.

Estate and Gift Tax Exclusion

The estate and gift tax exclusion will be set at $5 million per taxpayer with any amount in excess of $5 million taxed at 35%. This is certainly more favorable for taxpayers than what many advisors and experts had expected to see out of this lame duck session of Congress.

Step-Up In Cost Basis

Taxpayers often ask what is the best way to plan for the transfer of their wealth at death. The most appropriate and suitable answer is generally to continue to defer their taxes throughout their life time by using tax deferred and tax exclusion strategies such as the 1031 Exchange. This allows the taxpayer's money to keep working, building and growing for him or her.

However, by far, the biggest benefit here is the ability to leave assets to heirs at a step-up in cost basis. This means that essentially the capital gain taxes go away when property is inherited by others. The person that inherits the property gets their new cost basis stepped up to equal the value of the fair market value of the property at the date of death.

Taxpayers can continue to defer capital gain taxes over the years, including depreciation recapture taxes, by structuring 1031 Tax Deferred Exchanges, and then leave the real estate or personal property to their heirs without incurring any capital gain taxes or depreciation recapture taxes. The heirs are only responsible for any capital gain tax or depreciation recapture tax that occurs or is generated after the date of death while they own the asset.

Beyond 2012

Planning for tax years beginning on or after January 1, 2013 is more problematic since these extensions end as of December 31, 2012, but at least we have some certainty for a couple of years.

Capital Gain Tax to Remain at 15%

2010-12-20T08:57:00.000-08:00

The U.S. House of Representatives and the U.S. Senate have approved the package of extensions of tax rates and unemployment benefits, sending the legislation to the President for his signature (H.R. 4583, 277-148).

The bill as passed sets the estate tax exemption at $5 million and the rate at 35%, and extends all of the Bush era tax cuts for two years and reduces the Social Security payroll tax from 6.2% to 4.2% for 2011.

San Diego business leaders honored for support of community causes - SignOnSanDiego.com

2010-10-04T12:05:00.000-07:00

San Diego business leaders honored for support of community causes - SignOnSanDiego.com

PUBLISH & PROSPER: Become A Published Author

2010-10-03T22:25:00.000-07:00

There are few things that bring a real estate professional more credibility than becoming the author of a book. But most of us don't have enough time to write one!

This webinar discusses the benefits of authorship, of becoming published as a real estate professional and the concept of a "contributory book" - a book written from the contributions of several real estate professionals from within their area of expertise.

Dan Stuenzi, Publisher from Collaborative Press, LLC will also discuss a new contributory project for real estate brokers and agents, mortgage professionals, appraisers, 1031 exchange Qualified Intermediaries, and other professionals within the real estate industry.

Learn how you can become a published author. Click here for a free webinar.

Save Your Deals With a Reverse 1031 Exchange

2010-09-12T19:20:00.000-07:00

You are invited to the next webinar in The Exeter Edge™ Webinar Series entitled:

Save Your Deals
With a
Reverse 1031 Exchange

Monday, September 13th, 2010, at 10:00 AM PDT.

Click Here For More Information and/or to REGISTER. There is no cost to register, and you can invite colleagues, friends, and guests, too. Click here to view other upcoming webinars in The Exeter Edge™ Webinar Series.

William L. Exeter Appointed Technical Editor for Real Estate Wealth Book

2010-09-08T15:55:00.000-07:00

Book publisher Collaborative Press has announced the appointment of William Exeter as lead technical editor for an upcoming title for real estate investors: Real Estate Wealth: Investing in Turbulent Times.

Collaborative Press publishes books for the public that are co-authored by professionals from a wide variety of disciplines, and from different parts of the country. That methodology produces consumer books that contain the best thoughts and practices of the top experts.

Real Estate Wealth: Investing in Turbulent Times will be written by selected real estate agents and brokers, mortgage professionals, appraisers, home inspectors, 1031 Exchange facilitators, attorneys, financial advisors, insurance professionals, and CPAs. Contributing Authors are chosen by an application process, based on years of experience, education and training, and other professional credentials.

William "Bill" L. Exeter was selected as the lead editor for this upcoming work because of his broad experience and expertise in the field of real estate investing. He is the President and Chief Executive Officer for Exeter 1031 Exchange Services, LLC; Exeter Fiduciary Services, LLC; Exeter IRA Services, LLC; and their affiliate companies. Mr. Exeter is based in the company's national corporate headquarters located in San Diego, California.

Mr. Exeter has been in the fiduciary services industry since 1980. He began specializing in real estate tax strategies in 1986 with a specialty emphasis in 1031 and 1033 Exchanges as well as Self-Directed IRAs.

His area of expertise also includes specialized trust and fiduciary services for the real estate industry, including Title Holding Trusts or Land Trusts, dispute settlement trust accounts, dispute resolution trust accounts, divorce or dissolution trust accounts, cash holding escrows or holding trust accounts, and environmental hazardous waste clean-up fund trust accounts.

Mr. Exeter has written and lectured extensively on 1031 and 1033 Exchange transactions, tenant-in-common (TIC) investment properties, Self-Directed IRAs, Deferred Sales Trusts™ and Title Holding Trusts or Land Trusts.

In addition, Mr. Exeter is the owner and host of The Exeter Group Real Estate Talk Radio Show™, is a frequent guest expert on "The Financial Advisors — Money Talk Radio Show” on San Diego News Radio AM 600 KOGO and on the "Inside Business Radio Show" on Business Talk Radio AM 1000 KCEO San Diego.

Mr. Exeter also serves as an industry consultant and advisor and as an expert witness on 1031 exchange related litigation.

Donating Real Estate? Consider Doing A Cost Segregation Study First!

2010-09-03T21:23:00.000-07:00

Generally, investors will consider making a charitable contribution or donation of real estate for tax purposes. There may be other objectives, but tax planning is often the primary motivation.

So, if you are going to make a charitable donation of real estate to a qualifying charity of your choice, why not take full advantage of the tax planning opportunities available to you?

Cost Segregation Study

You should give serious thought to doing a Cost Segregation Study first, which would allow you to accelerate your depreciation deductions on the personal property components associated with the commercial real estate, and then you can complete the charitable contribution and receive your tax deduction for the donation.

It's the best of both worlds. You speed up depreciation write offs for the personal property and take a catch up tax deduction in the current year for the prior year depreciation that you did not take, and then you also receive your charitable contribution deduction either through an outright contribution or through a charitable remainder trust.

The longer you have owned the property, the more you can benefit from a Cost Segregation Study prior to making a charitable contribution. I would be happy to discuss this use of the Cost Segregation tax planning strategy with you, just call.

What Is Taxable Boot in a 1031 Tax Deferred Exchange?

2010-07-10T00:01:00.000-07:00

The term taxable boot refers to any non-like kind property received in a 1031 Tax Deferred Exchange. For example, if you are selling real estate that was held for rental, investment or use in a business, then non-like kind property would be any type of property that is not real estate held for rental, investment or use in a business.

The term cash boot refers to the receipt of cash. In other words, you end up with cash left over after you have completed the acquisition of your replacement properties in your 1031 Tax Deferred Exchange.

The term mortgage boot (also called debt relief or mortgage relief) means that the taxpayer has traded down in the value of replacement properties acquired and therefore has less debt on the replacement properties than what he or she had on the relinquished properties even though he or she reinvested all of his or her cash equity.

Happy 4th of July!

2010-07-04T10:20:00.001-07:00

The staff at The Exeter Learning Institute wishes you and your family a very happy and safe 4th of July holiday.