As you know it’s always tough to finance land and in today’s world it’s next to impossible. When selling land today you are faced with the fact that it will either be a cash sale or seller carry back. This is where we start off this month.
The Exchangor is relinquishing a property that is raw land with a sales price of $105k. The buyer’s down payment is 10% with the Exchangor carrying the 90% balance. Our client intends to do an exchange and to be totally tax-deferred. In order to accomplish these objectives the note on the Exchangor’s relinquished property will have to be converted to cash or used as consideration for the replacement property’s purchase.
We have historically offered a variety of options to convert or use the note while maintaining tax deferral, consider the following:
- Use the note and cash in acquisition of the replacement.
- Discount and sell the note
- Exchange only the down payment
- The Exchangor may be the note
- Utilize a short-term note and complete the exchange upon payoff
And now we offer you the possibility of using your IRA to buy the note. It is a prohibited transaction for an investor to use a retirement account to buy a note from himself but in an exchange the note is the accommodator’s at settlement. The accommodator is not a disqualified party to the Exchangor’s retirement account and therefore the investment can be made!
Call us today for details on this solution and as always it is critical that an investor’s tax and or legal counsel review options such as this before moving forward. 800.735.1031
So What Happened with Last Month’s Deal?
If you recall last month’s deal we were stuck in limbo between a delayed exchange and the possibility of a reverse exchange. We prepared ourselves for both options and finally got the deal closed with a basic delayed exchange. The funds necessary to get the last leg closed started the day in San Francisco and were wired directly from closing to a closing in Portland and finally to a closing in Lake Oswego. The three escrows were closed in a day!
In today’s world it is more important than ever to be ready to close when the banks are. Planning and coordination empower investors the ability to be confident they are prepared no matter what exchange structure is required.
Call us today to find out how we can help you close your next deal when you want to! 800.735.1031