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1031 Tax Deferred Exchanges
Services provided by
Iowa Equity Exchange
Ken Tharp, President
4800 Mills Civic Parkway, Suite 205
West Des Moines IA 50265
www.iowaequityexchange.com
515-224-5259 phone
515-771-8801 cell
515-223-8492 fax
Iowa Equity Exchange was founded to meet the needs of land owners and investors who desire to defer capital gain taxes on real estate transactions involving property used for investment or the productive use of a business. We provide Qualified Intermediary services for tax-deferred exchanges throughout the United States.
Iowa Equity Exchange was founded by Ken Tharp to serve land owners and investors of all levels of expertise and experience. In addition to having been a real estate investor himself since 1979, Ken has been involved in virtually all areas of real estate—from sales to new construction to property management to extensive renovations. After personal experience in a number of §1031 tax-deferred exchanges, it became a passion to expose this invaluable process to as many other individuals as possible—thus was born Iowa Equity Exchange.
At Iowa Equity Exchange, our commitment is to provide land owners and investors with the highest level of expertise in the industry. Our services are designed to provide the highest security for funds held and to maintain the integrity of every exchange.
A “Qualified Intermediary” has the very specific role of guiding the exchanger through a §1031 exchange. We inform the exchanger of exchange requirements, produce the necessary exchange documents, provide the critical time monitoring procedures required, and manage the exchanger's funds while in our possession. In no way does what a QI does replace competent tax or legal advisors.
Why choose Iowa Equity Exchange?
- Ken bring 30 years of practical, real-world experience in the real estate industry to Iowa Equity Exchange.
- We are a member of the Federation of Exchange Accommodators
- We provide Qualified Intermediary services for tax-deferred exchanges throughout the United States
- This is our only business. We closely monitor tax law changes that can affect your exchange.
- We help the exchanger deal with the obstacles that must be overcome to qualify for tax-deferred treatment
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When it comes to 1031 exchanges I always recommend Iowa Equity Exchange. I've worked with Ken on 1031's and he has guided my clients successfully through the process. I always hear great things back from my clients about how easy Ken made the process. His experience as an investor himself is invaluable to each client. Ken has provided some information for this page so please look over it and see if it fits you. As far as I'm concerned there is only one thing you need to know about 1031 exchanges, "Call Ken because he makes it so easy"
About Exchanges
WHAT IS AN IRC §1031 TAX DEFERRED EXCHANGE?
Exchanging has been around for centuries. Bartering is a form of exchange. The Internal Revenue Service established a clear-cut (some of the time) manner in which a taxpayer may sell a property held for investment or productive use in a trade or business and reinvest the proceeds into another “like-kind” property without obligation for payment of capital gain tax. For the land owner or investor, this can allow protection, growth, and diversification of assets, among other benefits.
The theory behind Section 1031 is that when a property owner reinvests sale proceeds from one property into another property, the economic gain has not been realized in a way that justifies a tax. Put another way, the taxpayer's investment has not changed; just the form of the investment has changed (e.g., raw land exchanged for commercial building). Thus it would not be fair to tax the property owner on what amounts to a “paper” gain.
WHAT ARE SOME OF THE QUALIFICATIONS TO HAVE A VALID EXCHANGE?
Property— Real property held for investment or used in a trade or business. Personal property used in a trade or business can also qualify for an exchange, but greater restrictions apply. Some examples of property that does not qualify for a 1031 exchange are: stocks, bonds, partnership or LLC interests, personal residences and stock in trade or inventory.
Qualified Use— Both the property being sold (the “relinquished” property) and the property being purchased (the “replacement” property) must be held for investment or productive use in a trade or business. Property acquired with the intention of quick resale does not qualify for 1031 treatment.
Like Kind— Once past the qualified use test, we can address the “like kind” test. Fortunately, this test is more black and white: Real property in the United States is “like kind” to real property in the United States. (Real property in a foreign country is not considered like-kind to US real estate.) Real property that is eligible for 1031 treatment includes single-family homes, multifamily properties, farmland, commercial office buildings, shopping centers, raw land, hotels, factories, leases of 30 years or more, quarries, and oil fields. Essentially, any type of real estate may be traded for another type of real estate as long as it satisfies the qualified use test. “Like kind” rules for personal property are significantly more restrictive. Iowa Equity Exchange can address questions about personal property exchanges.
Exchange Requirement— The IRS has established specific paths one should follow to ensure a proper exchange. For instance, the property owner cannot simply sell his or her property and use the proceeds to purchase new property. The exchanger must follow IRS guidelines, which prohibit the “actual or constructive receipt” of the proceeds of the sale of the relinquished property. The primary “safe harbor” provided by the IRS for receipt and holding of those funds is through the use of a Qualified Intermediary (QI) such as Iowa Equity Exchange.
Fees—Fees at Iowa Equity Exchange are very reasonable. In many cases, the fees are more than offset by the earnings that your funds generate during the time they are held by Iowa Equity Exchange. Please contact Iowa Equity Exchange to discuss our fee structure.
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