Created by the I.R.S. in 1990, section 1031 of the Internal Revenue Code allows taxpayers, with the aid of a Qualified Intermediary, to sell investment or income property solely for the purchase of other “like-kind” property within 180 days and to defer the capital gains taxes normally associated with such a sale. In essence, the taxpayer is exchanging one income property for another and deferring the gain in the process.

Known as a 1031 or a tax-deferred exchange, this strategy can be utilized again and again, allowing taxpayers to continue to defer gains throughout their lifetime and to accumulate more and more quality real estate.

With a 1031 Exchange, taxpayers can also consolidate, diversify, or convert the nature of investment properties in preparation for relocation, retirement, or even setting up heirs to inherit gain-free properties in the future. With a little planning, the 1031 Exchange can be a perfect tool for acquiring an ideal retirement home or setting up an inheritance for one’s children.

By learning the basics of 1031 Exchanges, you can enhance your value as an advisor to your clients. And here’s the best part: there are specific marketing strategies loan officers and real estate agents may utilize together to attract clients who will benefit from these transactions.

I have an educational interview with Craig Procter, the Vice President of Sales for Starker Services, Inc., the oldest and largest independently-owned Qualified Intermediary company in the country. Among the first to receive the CES (Certified Exchange Specialist) certification, Craig is a nationally-recognized speaker on the subject of real estate investment and an expert on 1031 Tax Deferred Exchanges. Since 1994, Craig has been providing exchange consultation services to create more awareness of this relatively unknown yet highly beneficial investment transaction.

If you’d like a copy of this informative interview, give me a call. Let’s discuss how we can create a pillar of business to take our production to the next level.

1. unemployment data
2. job growth in non-farm payrolls
3. median home price data
4. city’s estimated gross metropolitan product growth (projecting how rising foreclosures and falling home prices would affect overall levels of productivity in local economies.)

One result of interest……….

6. Salt Lake City, Utah

Median home price: +2.5%

Unemployment: 3.1% (from 2.6%)

Key growth: Education and health services, +5.5%

Though Salt Lake City’s unemployment rate is rising, it’s still among the lowest of the country’s 50 largest cities (Washington, D.C., is second, but declining home prices kept it off our list). The state is still creating jobs, just not as quickly as its labor force is growing. A November 2007 report from the U.S. Conference of Mayors projected that Salt Lake City would be one of the few large cities in the country not to suffer a decline in gross metropolitan product from the mortgage crisis.

We are poised here along the Wasatch Front to beat this market downturn.  If I were in the home buying market right now I would be loving it, since the buyers market has returned and deals are available everywhere.  People want to sell and they are making incredible deals.

Finding the shop, waiting in line, sitting in the lobby area, wondering if they found something wrong with the car, and then paying through the nose for tests and the new sticker.  (Although I have to say the On The Spot registration is slick and I commend the DMV for doing something right)

Anyway, yesterday I pull up to a light right behind a bus.  And given my state of mind I look right at the sticker for the regisitration date.  Guess what it says?

EXEMPT.  And right then the bus takes off and blows hoards of black smoke all over my car.  And the state is worried about me emitting too much pollution into the air? 

One other thing about the while situation ticked me off was the fact that as state tax payers we are probably subsidising the public transport system, and we have to register each year.  Feels like a double whammy to me.

So the next time you see a bus spewwing smoke all over the place just think about your tax dollars up in smoke.  Cause they probably are.

Hoever on the way home one of the boys says to me, “remember a couple of months ago we were talking about U2, and I didn’t know who they were?” 

I think I would have remembered that he didn’t know who U2 was.  But anyway he proceeds to tell me that someone took him to a IMAX movie about U2, and he thought a few of their songs were pretty cool.

What kind of world do we live in that kids today don’t know who U2 is?  Seriously!  I admit I loved U2 as a band growing up and followed their music pretty much to the end.  But in no way am I a U2 fanatic.  Still I would expect kids these days to know who the band is and a few of their songs.

Apparently I am no officially old.  I am talking about kids these days and how they should know and respect my music.  But then again, not too old casue U2 is still making music and I am sure a quick google of Bono would result in something he is doing recently.

Anyway, I was chapped that this kid (15 yrs old) has no appreciation for older music.  I think what it stems from is that when we were younger there was one raidio and no iPods or MP3 players so we were all forced to listen to our parents music in the car or house.  Until we got our coveted stereo system for our room.  Right.

So we at least knew what the music wass our parents listened to.  Now days most kids have phones and iPods and everything else.  They don’t even talk to you anymore, they’d rather sit across the room and text you.

Too much ranting.  I just think kids should know who U2 is.  So I am loading all the U2 songs onto my iPod and the next drive in the car with that kid will result in a U2-athon. 

So if you checked out the article you’ll see that the bottom 10 has Salt Lake City listed as 3rd from the bottom.  Sorry, but I have been to a bunch of other cities and states in the US and have seen way worse teeth than we have here.

Now, I’m not saying only perfect teeth are found in Utah, but not 3rd worst!  Seriously.  I was so disgusted by the ranking and article that I haven’t bothered to finish it to see if the authors explain their methodology or ranking system or whatever. 

I just have to say that I have grown more skepical lately of slanted reports and fluff marketing for readership sake.  Especially when it applies to national publications or newscasts giving us ‘data points’ that try to push our thought in a general direction.

I often sit in traffic and wonder why there is so much slowing because of an accident.  And I have come to my conclusion that much of it is because the authorities are gumming up the works by spending so much time at the scene of the accident.

I realize important work needs to be done, but does it really need to take so long?  I am not saying the safety experts should risk greater injury to the passengers or participants and the rest of us on the roads, but I am saying they could be more efficient in their actions.

I am not going to harp on slow Monday morning traffic this morning with no point.  What I thought was significant was that I think this accident is representative of the way the ‘authorities’ have been reporting and handling the mortgage and economy crisis.

A very small number of mortgages are failing.  While the economy is lagging, it is doing well.  (As represented by the better than expected earnings of major companies here in the US.)  Yet, while the rest of us try to move on with our work we are slowed to a crawl by the work they are doing on one small aspect of the economy highway.

The free market system is very efficient at dealing with and correcting issues in the economy.  I think we need to let it work.  I know here in Utah the housing market is picking up and buyers are buying again. 

One of the biggest reports already this morning centers around the news that the fourth largest US Bank, Wachovia, announced they need $7 billion in funds to continue to meet obligations.  In addition to this announcement, market analysts are expecting both Citibank and Merrill Lynch to report additional debt write-downs.

What this means is that the banks are continuing to struggle to deal with the extent of their sub-prime mortgage gambles.  However, while Wachovia, Citi, and Merrill are going through a tough time, it doesn’t mean they are not profitable.  None of them are reporting a loss, they are jus taking a write-down to lower their tax liability.

The main thing to remember is that the banks are still conducting daily business, they are still loaning money, and making mortgages.  The FED is also working closely to ensure the stability of the banking system in the US. 

What does this mean to us here in Utah?  People with provable income and assets are able to get loans.  Those without provable income and assets are finding it harder and harder to get loans.  Additionally, people with low credit are also finding the loan landscape a little tilted out of their favor.  But, low credit, and no credit loans are still available.

And we are doing them in 10 working days.  Purchase or refinance.   Stay tuned for market updates and guidance.

I feel the main thrust of any government intervention should not help those who speculated on the market.  Be they end consumers or major corporations.  Failure, while uncomfortable, is part of a free market system.   In the long run all consumers will be better benefited if there is less regulation rather than more.

With all the ‘bad’ news permeating the national media and markets we still need to remember how good it is in Utah.  Lets look at some facts…

            · 25,000—30,000 new households were formed in 2007

· Utah population growth was 3.2% in 2007

· US population growth 0.9% in 2007

· Utah job growth rate in 2007 was 4.5%

· US job growth in 2007 was 1.3%

· Employment is expected to grow in Utah at 3.3% in 2008

· Personal Income growth in 2007 was 9% in Utah

· Utah Unemployment is expected to stay at 2.9% for 2008

Contrary to what the news media is saying, the economy is good in Utah.  Let’s make it a banner year!

Paulson’s proposal leaves some observers wondering whether the Fed – which currently oversees the nation’s banks as well as setting interest rate policy – is up to that task.

These people argue that the FED stood by while the housing bubble took shape and then popped.  Causing the current situation we are in now.  Add to the FED’s inability to act their moves in recent weeks, saving the investment bank Bear Stearns, but placing the financial onus on the taxpayers.  And yet in the rescue many of the major shareholders MADE money.

All of this directly affects the lending industry and boils over into real estate and other industries.  Yet, I really would like to see more of these banks and hedge funds suffer a little more for the role they played in the current state of things. And additionally I don’t necessarily want to see the FED have a larger role.

I am not a fan of government taking over for free markets.  I think  free markets work best when left alone.  The regulation Paulson suggests will only cause the system to work slower and less efficiently. 

We’ll keep an eye on the Paulson proposal and let you know the developments.