I am a big fan of old western movies. Regardless of the movie, either a cowboy or the 7th Cavalry always came to the rescue at the last moment to save the day. Predictably, one of my favorite actors is John Wayne. Whether he was chasing the bad guys in the old west, defending the Alamo, winning the Civil War, fighting the Japanese at the Battle of Midway or fighting our enemies at D Day, he always seemed to come to the rescue. That’s what I loved about him and I always wished that in some way, I could do the same.

Well, now I can. I may not be saving Shinbone from Liberty Valance or Europe during WW2 but I can come to the rescue when a property owner is going to sell a property that will create a large tax liability. That works for me. And for you.

When selling a great property, you can either pay taxes on the gains or transact a 1031 exchange to defer taxes. The first isn’t a good option and the second is not always appropriate or has limitations to be completed.

But here is where I come to the rescue. There are numerous ways to defer taxes using the next generation of 1031s. Our Section 453 tax deferral strategies have a 20-year track record of successfully deferring taxes between 2000-2500 times with the largest transaction being $120 million with a tax deferral of $50 million.

If someone wants to transact a 1031 exchange and can complete it that’s great. To be on the safe side, we can guarantee that if a 1031 fails, the sales proceeds will NOT be sent to the seller which now creates a large tax liability but rather that taxes will be deferred, and the client now has unlimited time to find a replacement property.

Consider the following examples.

One of the main limitations in an exchange are the 45 and 180-day time periods. Supply of real estate properties can be elastic.   Sometimes there is a great supply of replacement properties and sometimes there isn’t. What if there were no time constraints to have to deal with.

What if you could sell a property today, defer taxes today and have unlimited time to find a great replacement property. Would that work? Absolutely.

But let’s take that thought to the next level. When transacting a 1031, you buy low and sell high but because of the 45-day period, you may have to buy high when market conditions may be less than favorable to your buyers. What if after you sold high, you had unlimited time to buy again so you could wait until market conditions became more favorable to buyers. Would that work?  Absolutely. And even better, while your buyer is waiting for market conditions to become more favorable, we will pay him a cash flow of 5-6% while he waits. So, using the next generation of 1031 s, you can buy low, sell high and buy better.

Say you have 4 owners of a property and all the owners want you to list their property BUT 2 of the owners want to take their proceeds and run to Vegas…not necessarily a bad strategy and the other 2 want to defer their taxes. Until you get everyone on the same page, you can’t list the property. Get your paperwork ready. The 2 that want to take the money and run can do so and the 2 that want to defer taxes can use our proprietary trust to do so. You get the listing and you owe me lunch. Preferably in Vegas.

Say that there is a property owner that has had a property in the family for 50,60,70 years and longer. He would like to sell but almost the entire sale will be capital gains and depending on where he is domiciled, taxes can range from roughly 25-40% so instead of selling, he decides to keep the property until he passes on and then his kids get the property with the stepped basis.

That’s not a bad strategy for everyone but you because you now can’t sell the property. Instead, what if you could explain to the prospect that you can sell today, defer taxes today, move closer to the grandkids today and receive a higher retirement income than if he sells and pays taxes first. And he can do all of this while alive.

You have a client that has transacted 1031 exchanges for decades and now that he has accumulated wealth, he would like to sell and retire. Unfortunately, he now has to sell and use the basis of the first property to determine taxes and the tax bill will be a whopper.

What if you have a 1031 Exit Strategy. That’s right. By using our trust, he can sell his property and defer taxes for the rest of his life and into the next generation if he chooses to do so.  By deferring taxes, he can enjoy the fruits of his labor by receiving a larger retirement income than if he would have sold and paid taxes first. You are his new best friend.

One last idea. Say that you come across someone that has a high end primary residential property and they want to sell. However, the sale will create a large tax liability to the sellers. You can sell their residence, defer taxes using our trust and help them buy another property any time in the future. That’s a great deal for them and you made a new friend.

These are just a few of our tax deferral strategies so call me so I can come to your rescue. John Wayne would be proud. It shows True Grit. I can’t believe that I typed that. Until the next time, Happy Selling.

David Fisher is the managing partner at Creative Real Estate Strategies, a national firm that specializes in deferring taxes in situations where a 1031 isn’t appropriate or can’t be completed. He can be reached at 713-702-6401 or david@cresknowsrealestate.com

Jackson Hole, WY, July 12, 2012 – Ranch Estate sites 11, 13 &14 at the
Bar BC Ranch in Jackson Hole, Wyoming have been acquired by a
client of Fay Ranches. Brokers Chuck Davison and Mike Jorgenson
represented the buyer—a longtime Fay Ranches client—in these
transactions. The combined asking price for the three ranches was
$23.5 million. With 53 acres, Site 14 is the largest among the
designated parcels that were drawn for solitude, vistas, and minimal
impact on wildlife habitat.

The Bar BC Ranch is a historic 1400-acre property with 17 ranch sites
located near Jackson Hole at the confluence of the Snake and Gros
Ventre Rivers. The original owners created the first guest dude ranch
in 1912 and also became conservation advocates for the Grand
Teton and Yellowstone areas.

“This is among the highest per acre real estate in the West,” observes
Jorgenson, based full time at the Fay Ranches office in Jackson Hole.
(more)“Bar BC is the most dramatic and unique property in the West,” Davison
emphasizes.

Only three ranch parcels remain for sale. Bar BC Ranch is a Hillwood
Communities development owned by Ross Perot, Jr.

Contact:
Juli Miller
208-788-4177 office
916-717-4118 mobile
jmiller@fayranches.com
www.fayranches.com

What Is A Conservation Easement?

Conservation easements convey a lawful interest in land where the landowner gifts or sells rights to a qualified entity like a land trust. The landowner retains full ownership with restrictions on activities they can do on the property. The landowner as well as land trust negotiate the restrictions and constraints that will be placed on the property. Conversation easements are voluntary negative easements, legally binding constraints on the usage of land for conservation, environmental, or historic purposes. They are granted in perpetuity and pertain to the land no matter who may own it in the future.

Landowners can sell or bequeath property that is covered with a conservation easement. Conservation easements can assist landowners in conserving their land, wildlife habitat, scenic areas or historic buildings. They are designed to satisfy the site-specific needs of the individual landowner and land trust. Conservation easements may also provide landowners with gift and property tax benefits.

Conservation easements might involve expenses for items including legal fees, survey and appraisal costs as well as other professional services. They are generally not a one-size-fits-all proposition. Landowners will have to completely understand the conservation easement and the benefits and limitations before signing. Numerous landowners didn’t have a full comprehension of what they were undertaking and therefore are now remorseful of having placed a conservation easement on their property.

Conservation easements are hard to draft and are costly to monitor and enforce over time. The land trust also must continue to keep track of the property to ensure that the landowner is not violating its terms. Landowners are notified when the land trust will be inspecting the property and the land trust has a legal right to enter the property. The land trust must also defend the conservation easement if legal action needs to be taken.

Conservation easements will become a more and more important conservation tool in the 21st century which will have significant benefits including better water and air quality as well preservation of natural resources. Landowners will hopefully educate themselves concerning the advantages and limitations of conservation easements to help make informed decisions. It is critical that landowners possess a full comprehension of what a conservation easement does and does not allowed them to do. Otherwise it is a recipe for conflict concerning the landowner and the land trust. If you’re searching for land for sale and locate a property that you might want that has a conservation easement, be sure to seek a professional who has an understanding of conservation easements so that you have a full comprehension of it before buying the property.

Learn more about Conservation Easements. Stop by Open Fences’ site where you can find out all about land for sale and the best property for you you.

When buying farms, ranches or land something that you must be aware of and run into frequently is easements. An easement is an irrevocable right to the use of another person’s property. Easements are often misunderstood and this misunderstanding of easements can lead to significant headaches later down the road after closing on a property.

One of the first basic things to determine about the easement in question is, is it appurtenant or in gross. An in gross easement is an easement for the benefit of a person whether they own property or not and does not pass with the land. For example if an in gross easement was granted by a neighbor to fish on their property to Joe and Joe sells his property, Joe’s easement does not pass to the new owner. Joe would still have the easement to fish on the neighbor’s property. However, if an appurtenant easement was granted for Joe to fish on the neighbor’s property then the easement would pass with the land at the time of sale to the new owner. As you can see, it is very important to determine what type of easement it is before you purchase a property.

Something else that you will want to be aware of is there are times where there may not be a written easement but there may be an implied easement or a case for a prescriptive easement. These are easements to research more if you are purchasing property where others are using the property on a regular basis without a written easement. Even though there is not an easement in writing they may be able to establish an easement if they can meet and prove certain criteria. In which case, you would have to continue to grant the easement.

Easements are something that you will run into often when purchasing property. They may be utility easements, rights-of-ways, oil and gas easements, easements for access to property, etc. You will want to understand them and how they will impact your use and enjoyment of a property.

There are many other types of easements and far too many details to discuss in this short article. If you would like to know more about easements, consult your broker or attorney.

When you began looking for land, it is important to understand how land is measured and priced. For instance, if you are looking for a farm for sale in Kentucky, farms would be represented in acres and either be priced by the acre or given as the total asking price. However,  if you are looking at New Mexico ranches for sale, the ranched may have size given in acres or sections with the price give in dollars per acre or as the total asking price. For those unfamiliar with the measurement of sections, 1 section = 640 acres or 1 mile X 1 mile.

Kentucky farms may range from a few hundred acres to several hundred acres while ranches in New Mexico may run from several thousand acres to several hundred acres or from several sections to upwards of 100 sections.

For those of you who may be interested in purchasing land in South America or Europe, you will most likely see land size given in number of hectares. 1 hectare=2.47105381 acres.

It is important to understand land measurement and be able to convert between them so that you can compare prices. For example, if land size is given in sections, you will want to convert to acres so that you can easily compare price per acre of other parcels. This will give you the ability to compare properties to ensure that you do not overpay.

While this does not apply to all sellers, many sellers can take advantage of today’s market. Sellers who have high levels of equity are in excellent position to capitalize on the current real estate market. How, you say?

First you have to retrain your sellers to think differently. During the land boom sellers might have gotten several offers and many times they would end up getting full asking price and sometimes more than asking price. As this became common place, sellers would turn down a lot of offers because they were seeing other sellers get full asking price offers and the property was not on the market very long. Now that we are in a down market sellers still have  not changed their way of thinking. They are still turning down those initial offers hoping for that higher offer because they do not want to miss out by selling too soon.

However most times a higher offer never comes and they end up lowering their price and many times accepting an offer that is even lower than previous offers. Sellers need to realize that they need to capitalize when they can in today’s market because buyers are more scarce. Also, even though they may be selling at a lower price than they would have a few years ago, they will also be able to buy a replacement property at a lower price than they would have paid a year few years ago. Smart sellers can sell their property and then capitalize by purchasing land, farms, and ranches at significant discounts especially if you find a seller who passed on the first few buyers and now are anxious to sell.

Buyers have much more bargaining strength in today’s market. However, many of your would be buyers need to be freed of their fear to act so they can capitalize on the buyers they are able to attract and become buyers themselves to take advantage of the opportunities that are available now.