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1031 Tax Exchange Articles
What
is Eminent Domain?-
Eminent domain is defined as the power of the federal or
state government to take private property for a public
purpose, even if the property owner objects.
How can the Government Justify
using The Power of Eminent Domain?-
The government must prove that the four elements set
forth in the Fifth Amendment are present in order to
justify using the eminent domain power. These elements
include: (1) private property (2) must be taken (3) for
public use (4) with just compensation.
EMINENT DOMAIN-THE “PUBLIC USE” PUZZLE-
As far back as 1795, the U.S. Supreme Court described
eminent domain as “the despotic power.” The dangers and
potential for abuse of the eminent domain power led the
authors of the United States Constitution to draft the
Fifth Amendment, limiting the power of eminent domain in
two ways.
Eminent Domain- Kelo vs. New London-The
2005 case of
Kelo v. New London
is the most recent “public purpose” eminent domain case
to reach the Supreme Court.
What are
the essential elements of a contract?
There are various contracts that have to be set in order
to complete a successful 1031 Tax Exchange transaction.
These include, but are not limited to, a purchase and
sale contract, a listing agreement, an escrow contract,
a contract with a qualified intermediary and various
contracts with financial institutions.
What are the
essential elements of a deed? The main
document of transfer in a 1031 Tax Exchange real estate
transaction is a deed. The essential elements of a deed
are its form and content, delivery and acceptance, and
recording.
Prorating the Transaction- The closing of
escrow in any commercial real estate transaction,
whether it be a 1031 Tax Exchange or not, incorporates
the prorating of certain payables and receivables.
Title Insurance-
Buyers of real estate, whether it is a 1031 Tax Exchange
or not, should be familiar with title insurance. There
are various different types of coverage available for
various different types of property, and should be
considered carefully when purchasing real estate.
Truth in Lending Act-
What is the Truth in Lending Act? What is an Annual
Percentage Rate (APR)? What is the Mortgage Loan
Disclosure Statement? What is the Real Estate Settlement
Procedures Act of 1974?
Holding Escrows- A
holding escrow arrangement is simply placing property,
whether it be sales proceeds awaiting a 1031 Tax
Exchange or not, into a holding account under the
control of an impartial third party until the
performance of a condition is met.
1031 Tax Exchange Escrows-
Escrow plays an important part in facilitating a
1031 Tax Exchange. Escrow processing cannot deal with
the legal or tax aspects of the 1031 Tax Exchange, but
some general observations can guide the escrow process
to insure a smooth successful transaction.
1031 Tax Exchange Financing
Alternatives- Over the last few decades,
lenders have created a variety of mortgage alternatives
to the traditional 30-year fixed rate loan. If you are
looking for financing for your 1031 Tax Exchange
replacement property, you should familiarize yourself
with the following mortgage alternatives.
What is Property?-
Property is anything that can be both controlled and
owned. Both of these conditions must be met in order for
something to be legally considered property.
Estates in Real Property-
There are two ways to hold ownership rights in real
property today, these are called Freehold and Leasehold
Estates. A Freehold Estate is ownership for an
indefinite period of time while a Leasehold Estate
establishes rights for a definite period of time.
The Federal
Reserve- What is the Federal Reserve System and how
does it effect the economy? How does monetary policy effect real
estate markets, and what effect can it have on my 1031 Property
Exchange?
Reserve Requirements- One
of the Federal Reserves major functions is monitoring the
reserve requirements held by its member banks. Read why this is
important to consumers and the economy.
Discount Rates- How
does the FED use discount rates to manipulate the
economy? The main business of commercial banks is
to lend money to consumers, whether it is to finance the
purchase of 1031 Tax Exchange replacement property or
not.
Open Market Transactions-
Another tool that the Federal Reserve uses to
manipulate the economy is an open market transaction.
Open market transactions involve the purchasing and
selling of government securities.
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