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UPDATE: IRS announces tax relief for victims of Hurricane Ian
10/13/22
In response to Hurricane Ian, the IRS has announced tax relief for those in affected areas including the states of ...
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<h2>Due to Hurricane Ian, the IRS has issued extensions of the 45-day and 180-day deadlines for the entire states of Florida, South Carolina, and North Carolina.</h2>

<p>&nbsp;</p>

<p><u><strong>The Disaster Date is September 23, 2022. The General postponement date is February 15, 2023. </strong></u></p>

<p>&nbsp;</p>

<p>Affected Taxpayers are defined as those individuals who live, and businesses whose principal place of business is located in the covered disaster area (anywhere in the state of Florida, South Carolina, or North Carolina). Affected taxpayers are entitled to relief regardless of where the relinquished property or replacement property is located. Affected Taxpayers may choose either the General Postponement relief under Section 6 or the Alternative relief under Section 17 of Rev. Proc. 2018-58.</p>

<p>Option 1: (Section 6: Affected Taxpayers only.) Any 45-day deadline or 180-day deadlines (for either a forward or reverse exchange) that falls on or after the disaster date is postponed to the general postponement date. The general postponement applies regardless of the date the Relinquished Property was transferred (or the parked property acquired by the EAT) and is available to Affected Taxpayers regardless of whether their exchange began before or after the Disaster Date.</p>

<p>Option 2: (Section 17 Alternative: Available to Affected Taxpayers and other taxpayers who have difficulty meeting the exchange deadlines because of the disaster.) Option 2 is only available if the relinquished property was transferred (or the parked property was acquired by the EAT) on or before the Disaster Date. Any 45-day or 180-day deadline that falls on or after the Disaster Date is extended to the longer of (1) 120 days from such deadline; or (2) the General postponement date.</p>

<p>&nbsp;</p>

<p><a href="https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-hu…; title="IRS Announces Tax Relief for Hurricane Ian ">Visit for full details on the tax relief.</a></p>

<p>&nbsp;</p>

<p><em>Details above provided by the Federation of Exchange Accommodators (FEA).</em></p>

<p>&nbsp;</p>

<p><em>Updated 10/13/2022.</em></p>

Metatags:
Title:
UPDATE: IRS announces tax relief for victims of Hurricane Ian
10/13/22
In response to Hurricane Ian, the IRS has announced tax relief for those in affected areas including the states of ...
Doubling Down on 1031 at the 2022 FEA Annual Conference
09/29/22
Our organization had the pleasure of attending the Federation of Exchange Accommodators (FEA) Annual Conference last week in Las Vegas. ...
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<h2>Industry Education</h2>

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<p>Accruit was honored to help educate our peers in the 1031 industry by presenting in both boot camps at this year’s conference. “Our team is absolutely recognized as leaders in the 1031 industry – we are the go-to QI for learning, solutions, and setting standards,” said Brent Abrahm, President &amp; CEO of Accruit.</p>

<p>David Gorenberg co-presented the 1031 Boot Camp to roughly 60 attendees. In addition to instructing the boot camp, David presented two General Session topics including Identification Pickles and Real-World Ethics for the QI. “Over the past fifteen years, I have presented approximately 30 sessions at FEA Annual Conferences. With each presentation I grow as a Qualified Intermediary, either because I am teaching new material or because attendees ask questions I haven't yet faced. I was honored to deliver three presentations this year, with many first-time attendees, and each presentation furthered my understanding of Section 1031, and my ability to translate that information to people of differing backgrounds,” said David.</p>
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<p>Martin Edwards and Matthew Douglas presented the Reverse Exchanges Boot Camp to approximately 50 attendees. The duo covered the different variations of parking transactions in relative detail over the course of the three-hour presentation, and fielded questions from a highly engaged audience mostly made up of other QIs who were interested in either deepening their knowledge of parking exchanges or preparing to start handling those transactions themselves. One boot camp attendee indicated that while she has attended various conferences that discussed reverse exchanges, for the first time she understood the subject after attending this particular boot camp. As a first time FEA attendee, Matthew was proud to represent Accruit and instruct on parking deals, which he spends most of his professional time handling. “It was a pleasure to take what I’ve learned working at Accruit, and with Marty specifically, and present it in a way that our audience seemed to understand and appreciate,” stated Matthew.</p>
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<p>&nbsp;</p>

<h2>Award Recognition</h2>

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<p>We are proud to announce that members of Accruit were recognized for their 1031 industry involvement and awarded the two coveted FEA awards for 2022.</p>

<p>Martin Edwards was awarded the Margo McDonnell Certified Exchange Specialist® Perpetual Award at the FEA Annual Convention. Nominated by peers, the award recognizes someone who has gone “above and beyond” and made significant contributions that benefit the 1031 exchange industry. Martin has over 35 years' experience in the 1031 industry, he is a current member and past board member of the FEA. His contributions include lecturing at the Illinois State Bar Association, multiple FEA Annual Conventions amongst many others.</p>

<p>Max Hansen received the 2022 President’s Award. The award recognizes an individual who has demonstrated outstanding leadership in their efforts on FEA’s behalf to save and grow the 1031 exchange industry. With over four decades in the 1031 industry, Max’s contributions are numerous, some of the more notable include a former FEA president and former co-chair of the Government Affairs Committee (GAC) of the FEA. He still serves on the GAC and actively promotes the benefits of 1031 exchanges for taxpayers and the economy as a whole.</p>
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<p>&nbsp;</p>

<h2>Revolutionizing 1031 – The Industry’s Only Patented 1031 Workflow Software (SaaS)</h2>

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<p>Accruit Technologies was proud to showcase Exchange Manager ProSM, the patented 1031 exchange workflow software, at the FEA Conference Exhibit Hall. Members of the 1031 industry are asking for technology solutions, and our team was able to deliver by conducting various demonstrations of Exchange Manager ProSM, the one-stop-solution for Qualified Intermediaries.</p>
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<h2>&nbsp;</h2>

<h2>All Business, But Also Fun</h2>

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<p>Accruit Technologies wrapped up the FEA Annual Conference by hosting an intimate After Party, with our friends at Capital One, for our existing QI SaaS Clients, prospective clients, and existing partners.</p>

<p>“It was a great opportunity to meet several of our SaaS clients and hear what they like about Exchange Manager ProSM,,” stated Mark Mayfield, Vice President, Service Development &amp; Delivery.</p>

<p>We’d like to thank the FEA for such a great event that will continue to push the 1031 industry forward. Marita Kazos, of the Accruit Technologies Client Success Team reflected on the experience, “To me the FEA Annual Conference is like the 1031 Exchange Oscars, and I am so thankful I was there.”</p>

<p>&nbsp;</p>

<h3><strong><em>Until Next Year!&nbsp;</em></strong></h3>
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Metatags:
Title:
Doubling Down on 1031 at the 2022 FEA Annual Conference
09/29/22
Our organization had the pleasure of attending the Federation of Exchange Accommodators (FEA) Annual Conference last week in Las Vegas. ...
Seller Financing as Part of a 1031 Exchange
09/13/22
One of the most frequently asked questions to 1031 exchange consultants by people wishing to do an IRC §1031 exchange pertains to ...
Body:

<p>Seller financing comes up most frequently where the seller is the taxpayer under an exchange, and the taxpayer is providing some seller financing to the buyer. However, it can also come up where the taxpayer is receiving seller financing from the seller of the replacement property.</p>

<h2>What is seller financing?</h2>

<p>Seller financing occurs when a person selling real estate is willing to let the purchaser pay the purchase price over time. This can be done for a wide variety of reasons such as the buyer cannot qualify for a conventional loan, or the economics of the deal require a lower interest rate compared to an outside lender. In this case the seller “holds the paper” requiring the taxpayer to pay the seller over time on specified terms. In general, it will also allow the seller to report the income from the periodic payments in the year in which they are received rather than all in the year of an outright sale.</p>

<h2>How does seller financing work?</h2>

<p>Seller financing can be structured in a couple of ways. One allows the buyer to receive title to the property at the time of closing and the other allows the buyer to take title upon payment of the last installment. More specifically, the first way would be documented with a promissory note from the buyer to the seller. This note would specify the interest rate, the length of time over which the loan was amortized, and the monthly payment amount. The note would typically be secured by a mortgage in favor of the seller as a lien against the property. In some jurisdictions the security interest used may be referred to as a trust deed or deed of trust.</p>

<p>The second way of documenting the transaction would entail some kind of installment contract between the parties. Again, there are regional differences regarding the name of that contract. It can be called an Installment Agreement for Deed or a Contract for Deed or Articles of Agreement for Deed. For tax and exchange purposes they are all the same. Generally, there would be some money paid down from the buyer to the seller and the balance financed over time. Sometimes it will be paid off at the time of the last fixed payment and in other instances it has a balloon payment for the final lump sum.</p>

<p>Whether the transaction is documented by a deed transfer at the time of the initial closing and secured by a note and mortgage or the deed passing upon final payment the tax treatment is the same. The buyer still owns the property either way, but subject to all payments being made. An analogy can be made to buying a new car with some dealer financing. In the case of an installment contract, the buyer owns the car but will not get clear title until it is paid off.</p>

<p>Regardless of the structure, the documents should show the funds payable to the Qualified Intermediary. Funds paid to the taxpayer would constitute "<a href="/blog/what-cash-boot-1031-exchange" title="What is cash boot in a 1031 Exchange?">boot</a>" and therefore taxable.</p>

<h2>How does seller financing work with an exchange if the taxpayer is financing the buyer?</h2>

<p>This can be a bit tricky. For §1031 purposes, a taxpayer only has 180 days from the date of sale of the relinquished property to acquire the replacement property. For there to be total tax deferral, the full value of the sale property must be reinvested into the replacement property. But when seller financing is involved, the seller does not have the full value to roll over. There are times when the full value will be paid into the exchange account within the 180 day window but more often than not, it will be paid after the 180 day exchange period. So, payments coming into the exchange account can be used towards the acquisition of replacement property, but funds payable after that 180 day term cannot.</p>

<p>Although there are various ways to deal with this, the most common one is for the seller to “advance” the balance due for the replacement property with personal funds. Those funds can come from the taxpayer directly or can be borrowed by the taxpayer. The exchange balance plus the additional funds are used to acquire the replacement property. The note and mortgage or the installment sale agreement is then assigned from the Qualified Intermediary to the taxpayer. Since the necessary value was invested on a timely basis into the replacement property, the receipt by the taxpayer of principal payments over time under the financing document are not taxable.</p>

<h2>How does seller financing work with an exchange if the taxpayer is receiving financing from the Seller?</h2>

<p>This situation is not as complicated as when the taxpayer is financing the buyer. In any exchange, in order to have complete deferral, a taxpayer has to reinvest all the net proceeds from the sale and have equal or greater new debt compared to debt paid off at the relinquished property closing. Debt in the form of the balance due under the seller financing structure counts just like conventional financing, so it would typically offset the debt requirement to have equal or greater debt on the replacement property.</p>

<p>In summary, seller financing is a part of many real estate transactions. However, due to the rules around §1031 exchanges, some special steps need to be taken on account of the seller financing. If the taxpayer is selling, the loan must be documented so that the exchange company is the payee of the loan, and the applicable security interest should correspond. Once the loan document is monetized from a cash infusion by the taxpayer, the necessary amount can be exchanged into the replacement property. Ultimately, the security interest is assigned to the taxpayer and the taxpayer will not recognize any tax on the principal received over time due to the advancement of the funds at the time of the exchange. In the event the taxpayer is receiving the seller financing in connection with the purchase of the replacement property, such debt obligation is treated no differently than any other loan from a conventional financing source. The seller financing debt will offset debt paid off upon closing of the relinquished property.</p>

Metatags:
Title:
Seller Financing as Part of a 1031 Exchange
09/13/22
One of the most frequently asked questions to 1031 exchange consultants by people wishing to do an IRC §1031 exchange pertains to ...
What Are Capital Gains?
09/02/22
What is capital gains tax? Are there variations of capital gains tax? How is capital gains tax calculated? How does ...
Body:

<p>Generally speaking, capital gains are any profits generated from the sale of assets. Further, people often refer to Section 1031 Exchanges as Tax Deferred Exchanges or Tax-Free Exchanges. The key language of the statute says that “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.” On its face, the statute is a tool to defer capital gains taxes, not to avoid capital gains taxes.</p>

<h2>What is Capital Gains Tax?</h2>

<p>Capital gains tax is the tax that American taxpayers (both US citizens and non-citizens) pay on any profits (capital gains) generated from the sale of assets. Those assets include real estate, investments such as stocks, and businesses, among others. According to the IRS, those gains are to be considered taxable income. The IRS has different tax rates for capital gains based on the taxpayer’s income tax bracket, as well has how long the asset was held.</p>

<h2>Are There Variations of Capital Gains Tax?</h2>

<p>Assets that the taxpayer held for longer than one year result in long-term capital gains, while assets held for less than one year result in short-term capital gains. The Internal Revenue Code treats short-term capital gains the same as any other ordinary income so that the tax rate is the same as your income tax rate. Long-term capital gains at more favorable rates, as shown below.</p>

<p>For 2022, the tax brackets look like this:</p>

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<h2>How is Capital Gains Tax Calculated?</h2>

<p>Generally speaking, if an asset is sold for more than its purchase price (it’s “cost basis”), there is a capital gain. On the other hand, if it is sold for less than it’s purchase price, there is a capital loss. But the Internal Revenue Code makes things a little more complicated, and calculates gain or loss based on the asset’s “adjusted basis.” To arrive at the adjusted basis, the taxpayer will start with the cost basis, and then add the cost of capital improvements, and subtract any depreciation taken. Note that only improvements to real estate can be depreciated, and the value of the land itself never depreciates. <a href="/depreciation-calculator" title="Depreciation Calculator"><em>Use our Depreciation Calculator.&nbsp;</em></a></p>

<p>To determine the final capital gains tax burden, the taxpayer would start by calculating the adjusted basis as described above, and subtract that from the current sale price; the difference is the capital gain. If the asset was held for longer than one year, the gain would be taxed according to the last column in the table above. If the asset was held for less than one year, the gain would be taxed as ordinary income based on the third column.&nbsp;<a href="/capital-gains-calculator" title="Capital Gains Calculator"><em>Use our Capital Gains Calculator.</em></a></p>

<h2>How Does Section 1031 Help with Capital Gains Taxes</h2>

<p>As noted above, Section 1031 provides that the gain on the exchange of an asset is not recognized in the year of the sale. Under the Internal Revenue Code, those gains are deferred, and will only be recognized at a time in the future when there is a taxable sale rather than another exchange.</p>

<p>A taxpayer can structure a transaction as a 1031 exchange in 2022, exchange that asset in 2025, exchange again in 2030, exchange again in 2032, and so on. Doing so would continue to defer the gains that accumulate between each sale. If that taxpayer ultimately sells the final asset in 2040, all of the deferred gains from each of those intervening 1031 exchange would be recognized.</p>

<p>But if the taxpayer is going to pay taxes at the end anyway, why exchange in the first place? There are two primary reasons that the taxpayer would structure those exchanges and then ultimately sell in a taxable transaction. First is the time value of money. Simply stated, the time value of money is the concept that a dollar today is worth more than a dollar tomorrow. Ask yourself this – would you rather pay someone $10,000 today, or ten years from now? Most investors would rather pay in ten years rather than today, preferably never if possible. The second reason is that theoretically, a taxpayer will sell their last investment property later in life, perhaps when they have past their peak earning years and are in a lower tax bracket. A married couple reducing their income from $650,000 to $200,000 would see their capital gains rate drop from 20% to 15% - a 25% reduction in the tax rate.</p>

<h2>Can Section 1031 be Used to Eliminate or Avoid Capital Gains Tax</h2>

<p>Using the scenario above, a taxpayer structures a transaction as a 1031 exchange in 2022, exchanges that asset in 2025, exchanges again in 2030, and exchanges again in 2032, before dying in 2035. Based on the Internal Revenue Code, that taxpayer’s heirs would inherit the final property at the fair market value as of the taxpayer’s death, receiving the property at a “stepped up basis.” The heirs do not need to worry about any accumulated depreciation or capital gains that a taxpayer had meticulously avoided through deferral, and they start with completely fresh basis. If the heirs were to sell the property shortly thereafter, there would be no capital gains to recognize.</p>

<p>By continuing to exchange throughout their life, this taxpayer successfully avoided all depreciation recapture and capital gains taxes. They effectively converted a tax deferred exchange into a tax-free exchange.</p>

<p>Section 1031 can be a powerful investment tool, and an incredibly useful estate planning tool. Taxpayers are encouraged to seek the advice of competent tax and legal counsel before structuring any 1031 exchange.</p>

Metatags:
Title:
What Are Capital Gains?
09/02/22
What is capital gains tax? Are there variations of capital gains tax? How is capital gains tax calculated? How does ...
Atlanta Deferred Exchange Implements Exchange Manager Pro, 1031 Exchange Software, and it is exceeding expectations
09/01/22
Exchange Manager Pro(SM), a patented 1031 exchange workflow SaaS offering, developed by Accruit Technologies automates the process for servicing 1031 exchange ...
Body:

<p><span style="font-size:12pt"><span style="font-family:&quot;Times New Roman&quot;,serif"><span style="font-family:&quot;Calibri&quot;,sans-serif">Denver, CO, August 30, 2022 – Atlanta Deferred Exchange (ADE), a Qualified Intermediary based out of Marietta, Georgia implemented Exchange Manager Pro<sup>SM</sup> in January <a>2022. Having&nbsp;</a></span><span style="font-family:&quot;Calibri&quot;,sans-serif">created over 700 exchanges year-to-date, they are already experiencing a 35% reduction in processing time. </span></span></span></p>

<p><span style="font-size:12pt"><span style="font-family:&quot;Times New Roman&quot;,serif"><span style="font-family:&quot;Calibri&quot;,sans-serif">Ron Raitz, Chief Executive Officer of ADE, and fellow member of the Federation of Exchange Accommodators (FEA) was looking for a more efficient way for their counselors to facilitate 1031 exchange services.&nbsp; His decision to implement Accruit Technologies’ Exchange Manager Pro<sup>SM </sup>was 3-fold: the solution had to improve the internal counselor experience, increase the ADE customer experience, and be a self-contained depository for all exchange information and documentation. “It has not only met but also exceeded our expectations. Choosing Exchange Manager Pro<sup>SM</sup> has been a great decision,” said Ron. </span></span></span></p>

<p><span style="font-size:12pt"><span style="font-family:&quot;Times New Roman&quot;,serif"><span style="font-family:&quot;Calibri&quot;,sans-serif">ADE finds the internal reporting system within Exchange Manager Pro<sup>SM</sup> very easy to navigate, with all of the information they need to reconcile internal operations in one place. The automated workflow is helping them become more proactive and less reactive as they continue to see 1031 exchange volumes increase throughout 2022.</span></span></span></p>

<p><span style="font-size:12pt"><span style="font-family:&quot;Times New Roman&quot;,serif"><span style="font-family:&quot;Calibri&quot;,sans-serif">ADE’s 1031 Exchange Counselor, Shaan Hawkins, said that Exchange Manager Pro<sup>SM</sup> streamlines the process for servicing 1031 exchanges; the software is easy to navigate and when a unique need arises, the Exchange Manager Pro<sup>SM</sup> technology team has been quick to respond and find the right resolution. “With Exchange Manager Pro<sup>SM</sup> we replaced our client database, file storage, and electronic signature applications and it’s positively impacting our bottom line, “says Shaan. </span></span></span></p>

<p><span style="font-size:12pt"><span style="font-family:&quot;Times New Roman&quot;,serif"><span style="font-family:&quot;Calibri&quot;,sans-serif">“We are fortunate to work with Ron and the Atlanta Deferred Exchange team. As one of our first, large-scale Qualified Intermediaries to implement Exchange Manager Pro<sup>SM</sup>, ADE’s feedback sparked additional features that we are proud to offer in our current out-of-the-box 1031 exchange software solution,” stated Brent Abrahm, CEO of Accruit Technologies.</span></span></span></p>

<p>&nbsp;</p>

<p class="paragraph"><span style="font-size:12pt"><span style="vertical-align:baseline"><span style="font-family:&quot;Times New Roman&quot;,serif"><b><span style="font-family:&quot;Calibri&quot;,sans-serif">About <a href="https://www.ade1031.com/&quot; title="Atlanta Deferred Exchange">Atlanta Deferred Exchange</a></span></b></span></span></span></p>

<p><span style="font-size:12pt"><span style="font-family:&quot;Times New Roman&quot;,serif"><span style="font-family:&quot;Calibri&quot;,sans-serif">Atlanta Deferred Exchange is a full-service 1031 expert helping real estate investors maximize the benefit of their exchange transactions Through years of experience, they offer clients and their allied professionals a complete toolbox of choices and strategic solutions. Their goal is to always exceed their client’s expectations, both in innovation and service. </span></span></span></p>

Metatags:
Title:
Atlanta Deferred Exchange Implements Exchange Manager Pro, 1031 Exchange Software, and it is exceeding expectations
09/01/22
Exchange Manager Pro(SM), a patented 1031 exchange workflow SaaS offering, developed by Accruit Technologies automates the process for servicing 1031 exchange ...
Accruit Aligns Organization to Support the Expansion of Their 1031 Exchange SaaS Offering, Exchange Manager Pro(SM)
08/09/22
Accruit Holdings LLC separates Qualified Intermediary Services and Technology Operations by launching Accruit Technologies LLC.
Body:

<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif">Denver, CO, August 4<sup>th</sup>, 2022 – Accruit Holdings LLC launched Accruit Technologies LLC to focus on the further development and growth of Exchange Manager Pro<sup>SM</sup>, their patented 1031 exchange software. Originally developed for internal use by Accruit LLC, an independent Qualified Intermediary, Exchange Manager Pro<sup>SM</sup> standardizes and automates the workflow improving efficiencies and increasing client satisfaction. </span></span></p>

<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif">In 2021, the Exchange Manager Pro<sup>SM</sup> Software as a Service (SaaS) offering became available to other Qualified Intermediaries and organizations that advise on 1031 exchanges. To date Exchange Manager Pro<sup>SM</sup> is licensed by numerous third parties and has processed over 10,000 exchanges. </span></span></p>

<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif">The formation of Accruit Technologies allows further separation of the 1031 exchange software from the Qualified Intermediary services. It also paves a clear path for initiatives in the Accruit Technology pipeline. Earlier this year, Mark Mayfield, Vice-president of Service Development and Delivery, initiated steps to conduct a SOC 2 Type 2 audit under the technology division.&nbsp; The company expects to finalize the first phase of this process by Q4. </span></span></p>

<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif">“Accruit Technologies is an exciting step for our organization. It allows our SaaS offering, Exchange Manager Pro<sup>SM</sup>, to develop and expand separately from our Qualified Intermediary practice. Exchange Manager Pro<sup>SM</sup> is revolutionizing the 1031 exchange industry, and we believe it is only just the beginning,” said Brent Abrahm, CEO of Accruit Holdings LLC.</span></span></p>

<p>&nbsp;</p>

<p><span style="font-size:12pt"><span style="font-family:Calibri,sans-serif"><b>About Accruit Technologies </b></span></span></p>

<p class="paragraph"><span style="font-size:12pt"><span style="vertical-align:baseline"><span style="font-family:&quot;Times New Roman&quot;,serif"><span style="font-family:&quot;Calibri&quot;,sans-serif">Accruit Technologies developed Exchange Manager Pro</span><sup><span style="font-size:9.5pt"><span style="font-family:&quot;Calibri&quot;,sans-serif">SM</span></span></sup><span style="font-family:&quot;Calibri&quot;,sans-serif">, a proprietary, online software application that makes administering 1031 exchanges safe, secure, and simple. Exchange Manager Pro</span><sup><span style="font-size:9.5pt"><span style="font-family:&quot;Calibri&quot;,sans-serif">SM</span></span></sup><span style="font-family:&quot;Calibri&quot;,sans-serif"> was designed to automate routine functions of Qualified Intermediaries including online client onboarding, document creation and distribution, and automatic deadline reminders and notifications.&nbsp;</span>&nbsp;</span></span></span></p>

Metatags:
Title:
Accruit Aligns Organization to Support the Expansion of Their 1031 Exchange SaaS Offering, Exchange Manager Pro(SM)
08/09/22
Accruit Holdings LLC separates Qualified Intermediary Services and Technology Operations by launching Accruit Technologies LLC.