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Real Estate Tax Information

What are the I.R.S. Rules for 1031 Exchanges? 

1. Real Property Use: Both old and new properties must qualify as investment or business use. If both properties pass this test, you can exchange nearly any type of real estate.

2. 45 Day Identification Period: You have 45 days from the closing of your sale to list  properties you may want to buy. 

3. 180 Day Exchange Period:  From the sale closing date, you have 180 days to close on the purchase of one or more properties from the 45-day list. 

4. Qualified Intermediary: The IRS mandates that you use a qualified intermediary to prepare legal documents for your exchange. The qualified intermediary must be independent and cannot be your friend, employee, broker, or even your accountant or attorney. The qualified intermediary holds your money so that you do not have access to it.

5. Proper Title Holding:  You must purchase and take title to your new property exactly as you held title to your old property.

6. Reinvestment Requirement:  To defer all of your capital gain tax, you must buy a property equal or higher in value than the one you sold.  Also, you must reinvest all of the cash proceeds from your sale.

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Average island prices drop but sales pick up pointing to good season

The average price of property sold on Sanibel between January 1st and September 30th has dropped 19% so far this year making a 25 percent decrease on average prices of sold property on Sanibel over two years.

The most expensive properties showed the biggest drop with a 27 percent drop in beachfront property prices and a 23 percent drop in bay front property. The only property type that gained was inland property which increased 13 percent in the first three quarters of this year.

Captiva fared no better with property prices overall dropping 30 percent over the year and 26 percent over two years. All categories dropped with near beach properties dropping as much as 55 percent.

Take a longer view and the picture is better. Captiva does better than Sanibel. Over five years, the average price of Captiva property has gained 57 percent. (But bear in mind that Captiva was still recovering from Hurricane Charlie five years ago and prices were depressed.) Average prices on Sanibel dropped just  9 percent over five years.

 

Take a still longer view and all categories fared, if not brilliantly, at least adequately.  Sanibel prices have increased 50 percent in the last ten years  and Captiva prices have gone up 42 percent with Captiva beachfront and Captiva near beach homes starring with 86 percent and 94 percent increases respectively. For a spreadsheet of island prices over ten years and more, e-mail Wendy at Wendy@SanibelProperty.com

And now for even better news……  Following a dismal start, a lackluster spring and a mediocre summer, sales have already started picking up for the fall with 17 homes and 14 condos either pending or contingent. This is highly unusual: October is generally our slowest month.