1031 Fun Facts with Tina Colson-Jones
Gotta Minute – Learn A Lot!
We are pleased to bring you another 1031 Exchange Fun Fact. Ever wondered if you’re meeting the requirements for your Exchange? Well, say hello to the Napkin Test!
The Napkin Test is a simple test was literally conceived on a napkin, at a seminar by California tax attorney Marvin Starr. It’s a basic exercise to determine the potential for exposing taxable assets or “boot” in an Exchange.
While it’s not a replacement for a detailed Exchange consultation, the Napkin Test offers a quick and easy way to assess your Exchange and identify potential boot.
Stay tuned next week for another fun fact!
Read the Full Transcript
Tina Colson-Jones: Welcome to today’s 1031. Fun fact, in any business you’ve got quirky acronyms and different sayings for different things, in the 131 Exchange world, we have the Napkin Test, the Napkin Test is a quick exercise to determine the potential for exposing taxable assets or boot in the Exchange. So, how did the Napkin Test get its name?
Well, it was literally conceived on an napkin at a seminar by California tax attorney, Marvin star of Miller Star and regalia, the calculations compare the relinquished and replacement properties and determine if the Exchange is training across her up in value equity and mortgage. Please note that a reduction in mortgage can be offset by adding cash and all dive into the mortgage scenario in my next video. Now that the Napkin Test has been reviewed, let’s talk about boot.
Boot is “unlike” property received in the Exchange going down in value or pulling cash out at closing can cause boot. Many people improve their property prior to selling in order to receive the highest value what they may not realize is that paying invoices for other services at closing, such as repairs, staging, or even paying off a home line of credit can also trigger tax in an Exchange when doing an Exchange. Always talk with your CPA. First, grab a napkin, work that napkin test, and certainly don’t let the boot kick you in the assets. Enjoy your day. Feel free to leave a call in and check out 1031Exchange.com for more information. Cheers!
The Guys With All The Answers…
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site, we are here to help Investors get where they want to be. Call them today! 503-635-1031.
"WASHINGTON STATE LAW, RCW 19.310.040, REQUIRES AN Exchange FACILITATOR TO EITHER MAINTAIN A FIDELITY BOND IN AN AMOUNT OF NOT LESS THAN ONE MILLION DOLLARS THAT PROTECTS CLIENTS AGAINST LOSSES CAUSED BY CRIMINAL ACTS OF THE Exchange FACILITATOR, OR HOLD ALL CLIENT FUNDS IN A QUALIFIED ESCROW ACCOUNT OR QUALIFIED TRUST." RCW 19.310.040(1)(b) (as amended)
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
