5 Ways to Simplify 1031 Exchanges

The term “1031 Exchange” in itself can be daunting as it gets thrown around often. Many people don’t fully understand what it entails but may actually heavily benefit from it. Here’s what you should know if you’re considering this savvy option for investing in, or transferring real estate.

First, let’s discuss what is a 1031 Exchange? Section 1031 is usually associated with the commercial real estate industry, however, also applies to personal property, artwork, aircrafts, commercial fishing boats, and more. This action allows an investor to defer any capital gains taxes that would be due as a result of the sale, i.e. rental home or commercial building. If earnings  from the sale are reinvested, those taxes could be avoided altogether. On the contrary, if the investor were to outright sell the investment property without the intent to put the funds toward another property, they could face capital gains taxation upwards of 20-30%; Ouch.

Now that we have a basic understanding of what 1031 Exchanges are, let’s dive a little deeper and simplify the hairier details.

5 Ways to Simplify 1031 Exchanges –

  1. Rules & Regulations
    • The replacement property the funds are transferred to in the reinvestment must be like-kind, meaning, residential property for residential property, large commercial building for large commercial building, vacation home for vacation home.
    • Both titles must list the same owner for accuracy
    • Reinvestment must take place. The total value of the replacement property needs to be equivalent, or more than, the previously sold property to avoid capital gains taxes.
  2. A Further Look, Rules & Regulations – You only need to satisfy one of the three main rules when it comes to 1031 Exchanges. Just remember “3-95-200“.
    • Identify up to 3 potential replacement properties, purchase any, or all of them, no matter their total value to properly complete the exchange.
    • This is not commonly used by investors, nevertheless should be talked about. This lesser-used option essentially allows and investor to name any number of potential replacement property of any value covering 95% of the total value of all properties owned, but there’s a downside. In light terms, while it may seem like the easiest option, read more into it, as it could actually lead you, the investor, with a bigger purchase commitment than anticipated.
    • Lastly, you have the option to identify more than 3 potential replacement properties, so long as their value does not exceed 200% of the total of the released property.
  3. The Process – This one’s a peace of cake, just make sure to complete everything within the deadlines detailed in our fourth step.
    • Disposition of the original property (Selling it)
    • Great, now you have sales proceeds, or capital
    • Identify single or multiple replacement properties for investment
    • Take sale proceeds to a qualified intermediary (this cannot be an agent you’ve worked with within the past two years on the sale of that property)
    • Take the investment capital and acquire a replacement property.
  4. Deadlines – Set up your calendar, these are important dates.
    • Days #0-45: Sell the property and identify what is next you’d like to invest in, property-wise.
    • Day #45: Complete the identification or probable replacement property/properties.
    • Day #180: Close escrow on the replacement investment property within this time frame, or 180 days after the disposition of the sold property.
  5. Resources – Certainly it’s wonderful to understand what you’re getting into, potentially, by educating yourself in 1031 exchanges. If you, or someone you know is interested in learning more and going through with a 1031 exchange, leave it to the experts and avoid hefty capital gains taxation.

Discover how the experienced and qualified professionals at CSR Real Estate Services, both residential and commercial, can help you find and close on your next 1031 exchange property or to learn more about the exchange process.

 

Silicon Valley’s Super Commute

Is Traffic Becoming Unbearable in California? – Yes. 

You may have noticed traffic in California progressively getting worse and worse. Our freeways just can’t keep up with the increasing number of people moving to the Golden State. Here, in the infamous Silicon Valley, people from all over the world are flooding the area for coveted jobs in the tech and developer field. Not only is this impacting traffic, but the real estate market as well. Luckily, the state of California is working on a major project that will reinvent the way we drive and commute throughout California.

California’s new $64 billion high-speed rail could be the answer to our problems. With funds continuing to come in and construction playing out as planned, 800 miles of track will be installed up and down the densely-populated state. Passenger service between San Jose to Bakersfield is expected to be available as soon as the year 2025. This innovative mode of transportation will help those super commute in an ever-populating area.

The train has an anticipated speed of 220 mph, along with 24 available stations throughout California. This innovative mode of transportation will be more affordable and convenient than flying, while also eliminating the long hours it takes to drive from one end of the state to the other.

The project will be introduced in different sections, the first connection will take place in San Jose to the Central Valley in 2025. The second is expected to open in 2029 and will have tracks from San Jose down to Los Angeles. The end goal of this multi-million dollar project is to have tracks that run down as far as San Diego.

The new high-speed rail will not only make travelling much easier, but will also alleviate some of the heavy traffic that is infringing on Californians’ everyday lives. The biggest obstacle the new train faces is running out of funds to complete the project. However, with the necessary funds, the future of commuting in the state could be changed forever. Just imagine living somewhere less-congested, in a quiet neighborhood and pioneering the super commute to Silicon Valley each day. The high-speed rail could be the solution to negating the overwhelming amount of traffic in California while also making the state feel a little less crowded; something desired by every driver here.

Thinking of moving away from the traffic? Contact our Roseville Office today to find your dream home. 

 

What rules govern the return of the security deposit to the tenant?

Q. What rules govern the return of the security deposit to the tenant?
A. Residential: Upon termination of a rental agreement on residential property, the landlord must furnish the tenant the unused portion of the security deposit and an itemized statement showing what deductions have been made, no later than 21 days after the tenant vacates the property. (Cal. Civ. Code § 1950.5(g).) The itemized statement must be accompanied by receipts or invoices issued by the person that performed the work that the deductions were used to pay for; or, if the landlord or landlord’s employee performed the work, the itemized statement must list the work that was done, the time spent, and the reasonable hourly rate charged. (Cal. Civ. Code § 1950.5(g).)
C.A.R. Sample Letter “Security Deposit Return” (Form SDR) may be used for this purpose and can be found in ZipForm within the C.A.R. Sample Letters library.
If the landlord retains any of the deposit in bad faith, s/he will be liable for up to twice the amount of the deposit in punitive damages, as well as any actual damages the tenant may suffer. (Cal. Civ. Code § 1950.5(l).)
A. Commercial: For commercial leases, the deadline for returning a deposit is generally 30 days. However, if the landlord only claims deductions from the deposit based on defaults in the payment of rent, and if the deposit exceeds one month plus the last month’s rent, then any amount exceeding one month’s rent must be returned within two weeks. (Cal. Civ. Code § 1950.7(c).) If the landlord retains any of the deposit in bad faith, s/he will be liable for up to $200 in punitive damages, as well as any actual damages the tenant may suffer. (Cal. Civ. Code § 1950.7(f).)
For more information, please see the C.A.R. Legal Q&A, Security Deposits.

Q. May a tenant take the landlord (or vice versa) to small claims court over a security deposit dispute?
A15. Yes, as long as the damages claimed do not exceed the jurisdictional limit for small claims court ($10,000 in most situations where the claim is brought by a natural person.). (Cal. Civ. Code § 1950.5(n); Cal. Code of Civ. Proc. §§ 116.220, 116.221.)

CSR Cares Announces Quarterly $5,000 Winner

CSR Cares is proud to donate $5,000 to one lucky charitable organization each quarter! The donation doesn’t just go to any charity, it goes to a deserving group that falls within CSR Cares’ founding values: to help the children and people in our community. This quarter’s winner and recipient is Teen Challenge, an organization comprised of a supportive network intended to help teenagers, adults, and families with problems such as substance abuse. Adult & Teen Challenge USA is holistic – meaning that they are concerned with the body, mind, and spirit of those who come to the organization for help. It is of top priority for them to help people become mentally sound, emotionally balanced, socially adjusted, physically well and spiritually alive. CSR Cares’ donation will go towards food, bedding, and overall program support.

CSR Cares is honored for having such generous agents to contribute donations on a monthly basis, in addition to what is received from external donations. This wouldn’t be possible without a community effort. At the conclusion of each quarter, CSR Real Estate Services votes for one lucky winner to receive the $5,000 in hopes to make a difference in the community. To learn more about how you can nominate an organization for a grant, click here. To view past recipients, click here.

Funding 15,000+ Autism Screenings

On Wednesday evening, CSR Cares’ board member, Laura Bonafede-Odom, was the proud representative at Autism Tree Project Foundation‘s (ATPF) Bay Area Parent Mentor Night at Stanford University. The Parent Mentor Night was hosted by Dr. Lawrence Fung, M.D., PH.D. The ATPF Parent Mentor Program serves families living with autism by offering personal support in a caring and warm environment. Parent mentors are there for mentees to lend an ear, help problem solve and guide the community to the resources children need. The night consisted of an insightful presentation, followed by recognizing CSR Cares as a strong Community Partner. Dr. Fung has opened doors and paved the way for internship and research programs at Stanford University involving those with autism. As a future outlook, the possibilities are endless.

As a result of CSR Care’s donations over the years, ATPF has gained the ability to conduct over 15,000 childhood screenings for autism detection in schools, free of charge. CSR Cares continues to host events to directly benefit ATPF on an annual basis. In years past, CSR Cares has proudly donated $20,000+ in 2017, in addition to 14 years of Golf Tournaments. 2018’s Annual Event is sure to be a success.

Business Purchase Financing

Business Purchase Financing – 3 Things You Need To Know To Get Approved

For those of you looking to buy a small business, there is good news on the lending front.  More lenders are coming back into the market for business purchase financing. Also more non-SBA lenders who are financing business purchases. However, just because conditions are improving doesn’t mean that securing business purchase financing will be attainable for everyone. Lenders are still being strict about who they are lending to and how much. Despite an improved outlook, lenders still want to make sure their loan gets repaid and for that, you need to be prepared! Before trying to get a loan this year, here are 3 things you need to know.

#1 – Learn About Your Options
As we’ve seen in previous years, getting a business purchase loan is no longer a matter of just walking into a lending institution and walking out with an approval.  Many business buyers have had to get creative in terms of where they secure financing from and that will be no different in the upcoming year.  As a business buyer, you should learn more about your options and really evaluate what kind of capital you have access to before you approach a traditional lender for funding.  While lenders are lending again, many people have less than perfect credit from the recession and as a result have a difficult time qualifying for traditional financing.  Being prepared with alternative funding sources is always a good idea regardless of your credit.

#2 Explore Seller Financing Options

Today, there are a lot of sellers that are willing to extend financing to the right buyer.  In fact, many lenders now require that the seller be a part of the financing mix.  It proves to the lender that the seller truly believes the buyer has what it takes to buy and run the business successfully.  To a lender, this ultimately means they will get their money back.

There are a few things you should know about seller financing.  One, you will probably pay more for the business.  When a seller offers financing options they are taking a risk, so that risk comes with a price tag.  Two, you need to be prepared to prove you are capable of running the business. Be prepared to write a business plan and to explain why you are going to be successful, it’s part of the process.

#3 Prepare, Prepare, Prepare

I can’t stress this enough.  Preparation is critical. Buyers need to get information before they make an offer and get too involved in the sale.  I suggest you get professionally pre-approved for financing and work with someone who understands how deals are structured to start you off in the right direction.

Buyers also need to be realistic about what it really means to buy a business.  For starters, they need to be realistic about what they can afford.  Don’t try to buy a business that costs millions of dollars when you have no money to contribute to the sale. Start smaller and work up to that.  Next, buyers need to know their limitations when it comes to the business itself. A buyer will be asked about their previous work experience, credit score, current salary if they are working, annual living expenses, outside sources of income, etc. so be prepared to share information in order to complete the transaction.

Lastly, understand that business purchase financing is a specialized form of financing. With that, getting approved really comes down to going to the right person at the right financial institution. Making that type of connection doesn’t come without preparation and it typically doesn’t come without the support of a specialty advisor in business purchase financing, so choose a good advisor/team to help you through this process.

Source: Peter Siegel, MBA is the Founder & President of BizBen.com.
Click here for full Article on Bizben.com

Celebrating Children’s Day

Our very own, Guadalupe (Lupita) Rodriguez donated her time to el Dia del Niño, a day commonly celebrated in Mexico, on April 30th, to recognize children and provide special events or activities for them to enjoy. The main focus of this celebrated day is to make children feel special. This annually-celebrated, unique event fills shopping malls with entertaining activities, special events, vendors, magicians, music, food, and more. The purpose of the festivities is to remind adults of the importance of childhood and to celebrate the joy that simplicity can bring. Lupita proudly represented CSR Real Estate Services at Eastridge Shopping Mall, in San Jose, to further inspire children to have career aspirations and to keep learning in school. Way to go!

15 Years of Success

This year marks CSR‘s 15th birthday! That’s right, we’ve been around for, perhaps, longer than you’d think. While this year we celebrate success as a growing, healthy company in the heart of Silicon Valley, we couldn’t have made it this far without the progressive thinking, motivation, and family-like-culture that our Leadership Team, Staff, and Agents posses. So why is this such a big deal? Well, research supports the fact that nearly 50% of businesses fail within the first year of life, 73% within the first five years, and an astounding 96% within 10 years time. This alone makes us pretty proud to still be standing strong after year 15. 

In 2003, Bonafede brothers, Steve and Brian, decided to continue their real estate business with their own Silicon Valley flavor, along with close friend, Dave Wendt.  From the start,  it was all about family and building relationships.  The business consisted of the two brothers, their sister, Laura, and Brian’s wife, Dina Bonafede. From there, close friends joined in and provided lending services to start the company’s initial growth. Just a few short years later, in 2007, CSR grew to 50 agents and staff, despite the economic downturn. Through it’s many ups and downs, business stayed above water and the Bonafede brothers stepped up to the plate. They continued to educate veteran and new agents on how to best maneuver through the ever-changing market. Simultaneously, CSR’s Commercial Division was formed by close business partner, Tony Odom. Both businesses fought for success together and grinded it out through seemingly impossible times. While it seemed nobody could buy a house and businesses were closing left and right, somehow, CSR made it through to the light at the end of the tunnel.

2012 rolled around and the company was in need for a few adjustments in order to maintain growth among Silicon Valley’s vast technology boom. That year, Terry Meyer, VP of Operations & Broker Associate, joined the CSR family. With heavy knowledge and experience within the real estate arena, Terry was able to collaborate with the Bonafede brothers and act as the glue that held the expanding company together through recruiting, branding, and promoting a company culture of inclusiveness and education. The following year, in 2013, Duane Hood joined forces with the Commercial division, thus forming CSR Commercial Capital, which provides comprehensive financing solutions.

The next year, in 2014 CSR Cares was born. One of the guiding principles at CSR is that we support and ignite positive change in the community where we work and live. The foundation is a non-profit organization focused on supporting and benefiting children within our community. To this day, CSR Cares has raised over $1,000,000 in an effort to support the well-being of children and the community. 2016 came around and our agent pool grew to 70 agents and staff, and exceeded 100 agents the following year.

2017 was a big year for CSR. Not only did we expand to Roseville, CA, we also can check a successful business merge off the bucket list. In September 2017, Silicon Valley Associates (SVA) joined forces with CSR and appointed Don Jessup as Vice President. In the latest news, both CSR Residential and CSR Commercial divisions have been recognized by Silicon Valley Business Journal and named in the Top 10 Real Estate Firms in Silicon Valley. Here’s to 15 years of success and many, many more.

Lending the Community a Helping Hand

To finish up April strong, Don Jessup and the Santa Clara County REALTORS® Foundation repainted and conducted other repairs to a home in Downtown San Jose as part of Rebuilding Together Silicon Valley’s Rebuilding Day, an event to better the community. The 47 amazing volunteers, including San Jose Mayor, Sam Liccardo, really made a difference that day. #RebuildingSV

 

Making a Difference in the Community

Power couple, Dina and Brian Bonafede, took a step up in the community as a result of making a major impact in a local school’s charity event this past Friday, April 20th, 2018. Dartmouth Middle School, in close proximity to CSR Real Estate Services, was overwhelmed with joy from the couple’s generous donation of $5,000 to the middle school’s  Home & School Club to further benefit the music program. The mission of the Union School District is to enrich the community through learning. The school district is dedicated to children: to involve the community, to anticipate challenges; to take advantage of opportunities; and, to guarantee vital skills for all our children to pursue lifelong learning and become productive citizens.

Friday, the school hosted a comedy night, filled with silent auction items, raffles, food, beverages, selfie stations and more, all in an effort to raise money for the program. Before the night concluded, Dina and Brian proudly presented their donation to the entire school. While a grand total has not yet been identified, upwards of $31,000+ in donations were generated that night, a new school record! CSR couldn’t be more proud of these all-star company representatives and model-citizens.

Founded in 2003 by real estate veterans who sought to enhance the experience of buying and selling a home, CSR Real Estate Services is a boutique, Silicon Valley real estate brokerage. CSR stands for: dedication to the Community where we live and work high level of Service provided to clients and business partners long term Relationships fostered through integrity, competency and mutual respect.