Bye, bye 45-day Property Identification?

A legislative movement is afoot that would eliminate the onerous 45-day property identification period for Like-Kind Property Exchanges.

The “1031 Exchange Improvement Act” (sponsored by US Senator Mike Lee (R)), removes the property identification requirement completely.

The Senate Majority leader must first introduce a bill to the Senate floor for passage.

Mineral Rights – a “Replacement Property” alternative

Selling appreciated real estate often can be simpler than buying suitable Replacement Property.

One lesser known asset class, which is eligible within the context of a property exchange, is direct-deeded mineral rights.  Some forward-thinking firms have amassed pools of these oil and gas interests spanning  hundreds of counties within dozens of states. 

Purchasing a tenancy-in-common (TIC) interest in these pools provide a broad-based portfolio diversification benefit, through a “pure” investment in the energy sector.

Some programs include thousands of wells, spread over vast graphic areas, which provide stability against any periodic localized disruptions.  Mineral Rights owners are lessors to large mining companies that bear all of the operating costs and liability of operations.

As an additional perk, IRS regulations offer a 15% tax reduction on revenue earned by this asset class.

Audits, Audits, and More Audits!

Since 2018, New York State Department of Taxation and Finance has been very aggressive in pursuing revenue from defective IRC Section 1031 tax-deferred property exchanges.  New York Deferred Corp. (NYDEC) is currently involved in protecting several exchange client’s interests through active, direct communication with State auditors when necessary.  NYDEC maintains a 100% success rate at ensuring properly structured exchanges through our renowned and proprietary Comprehensive Service Exchange program.

Selecting a Qualified Intermediary (QI) may seem like an insignificant decision.  It’s not.

Finding a 1031 NYC Qualified Intermediary

In IRC Section 1031 parlance, “qualified” does not denote “competence”.  The regulations state any party related to the property exchanger is ineligible, or “disqualfied”, to act as intermediary (or exchange accommodator).  Correspondingly, unrelated parties are therefore deemed “qualified”.

There are a number of truly competent 1031 companies in New York, but it is important to research the history, background, and reputation of a QI, while structuring a property exchange.  New York Deferred Exchange Corp. was the first qualified intermediary to establish a practice in New York (1991).  With offices in New York City and Nassau County, NYDEC has administered thousands of property exchanges in the five boroughs and surrounding counties, as well as maintaining clients throughout the United States.  The large (and growing) number of 5-star Google reviews attest to our unparalleled reputation in the field.

 

DST a “Replacement Property” alternative

Many of NYDEC’s clients elect to invest in Delaware Statutory Trusts (DST) as an Replacement Property alternative.

Here’s why:
1) Eliminates real estate management hassles
2) Diversification of portfolio
3) Debt replacement without qualification (to avoid mortgage “boot”)
4) Forecasted yield
5) Declared exit strategy

It is important to engage a qualified professional to guide you through the selection process and clearly answer questions. Although each exchanger is responsible for making this choice, NYDEC has found Fortitude Investment Group (www.1031DST.com) to be an excellent resource for over 15 years. Many exchangers have expressed appreciation for the services offered by Managing Partner, Dan Raupp.

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