Investment Blog

Fannie Mae's Definition of Market Value

This definition is contained in the Fannie Mae appraisal form (1004) this is used for most conventional loans.

Market value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Basics of a 1031 Exchange #2

By Kevin Schill

We left putting you in the capable hands of a qualified intermediary.  Now we want to look at the time line.

Once you close the first exchange property you have 45 days to identify in writing to the intermediary the replacement property.  At this stage you can actually identify up to three properties, but the total value of these properties cannot exceed 200% of the value of the original property.  You then have 180 days to close the replacement "like-kind" purchase to complete the exchange.

Avoid Boot.  Boot is defined and any money or property of unlike-kind above the valid exchange amount.  You will be taxed on this boot even if you carry out  a property executed 1031 exchange.  Have you exchange company, attorney, or intermediary examine your transaction to make sure you did not receive anything that could be considered boot.

In conclusion, a 1031 exchange is a good way to maximize your investments without immediately paying taxes.  This basic information provided is just that, BASIC.  If you are planning to do a tax deferred exchange please speak to a qualified intermediary, attorney and/or your CPA.

© Kevin Schill 2018