Spectrus Real Estate -- A Nationwide Leader in Diversified Investment Real Estate

Spectrus Real Estate Completes 1031 Exchange for Wisdom Pointe

Spectrus Real Estate, a real estate principal and leading provider of investment real estate in the United States, has completed a deal in the Atlanta, GA area, through its Net Lease PLUS™ program. The company closed a 1031 exchange transaction for Wisdom Pointe, a 21,885-square-foot retail center in Peachtree City, Ga.

Spectrus sold Wisdom Pointe in a 1031 exchange as an investment real estate opportunity to a private buyer located in West Virginia. The seller was represented in-house by William Reich, National Net Lease Sales Director, with Spectrus’ regional office in Washington, DC.

“The buyer sought a quality investment real estate opportunity that would provide a steady and secure income,” said Reich. “Wisdom Pointe is located in Peachtree City, which is a thriving Atlanta suburb with solid demographics and strong growth. In addition, the retail property offered an ideal tenant base for the market.”

Spectrus’ Net Lease PLUS program provides 1031 exchange benefits to buyers of individual properties by offering multi-tenant properties for sale through its unique Net Lease Plus program, providing a contractual annual payment of 6.5% percent or more plus 100% of any appreciation upon sale. The program offers individual property buyers enhanced stability by wrapping their multi-tenant properties with a long-term master lease with DBSI Housing, a highly respected affiliate of Spectrus, which acts as a credit tenant and asset manager.

The DBSI Housing master lease ensures that the owner retains control over significant property decisions without daily management responsibilities, and contractual annual rent payments paid monthly. The program is ideal for 1031 exchange buyers as well as real estate buyers seeking to reduce the overall risk profile of their real estate portfolios.

Multi-tenant properties offer increased security through tenant diversification vs. a traditional single tenant net leased property. In addition, structuring the transactions through a master lease with DBSI Housing ensures greater level of due diligence and on-going commitment from a company with a 30-year history of integrity and performance.

About Spectrus Real Estate
Spectrus Real Estate is a leading provider of diversified investment real estate. What drives Spectrus’ success is its ability to offer only the highest-quality, institutional-grade property, qualified through stringent due diligence. With an array of individual buyer property opportunities, Spectrus has become a buyer’s leading option when it comes to accruing wealth through real estate ownership. To learn more visit www.spectrus.com.

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Spectrus Real Estate - 1031 Tax Deferred Exchange

What is a 1031 Tax Deferred Exchange?
A 1031 tax deferred exchange allows you to roll-over all of the proceeds received from the sale of an investment property into the purchase of one or more other like-kind investment properties. At closing, proceeds are transferred to a third party--called a facilitator or qualified intermediary--who holds them until they are used to acquire the new property.

1031 Tax Deferred Exchanges Allow You to Delay Capital Gains Taxes
Capital gains taxes are deferred if all of the exchange funds are used to purchase like-kind investment property.
Under a 1031 Tax Deferred Exchange, the deferment is similar to an interest-free loan on the tax dollars you would have owed for a cash sale. More equity is retained, which helps you move into properties of higher value each time you perform a 1031 exchange.

What's Eligible Under a 1031 Tax Deferred Exchange?
A 1031 tax deferred exchange is possible when you sell real estate held for investment purposes.

Like Kind Properties Under a 1031 Tax Deferred Exchange
Exchanged properties must be like kind. This means real-property for real-property, but not necessarily land for land or a rental house for another rental house.
With a 1031 tax deferred exchange you can exchange a single property for multiple properties, or purchase one property from the proceeds of several. Proceeds not used to purchase new investment property are taxed as a cash sale.

Spectrus Real Estate - 1031 Exchange Rule

A property transaction can qualify for a deferred tax exchange only if it follows the 1031 exchange rule stated in the tax code and the treasury regulations.
The foundation of the 1031 exchange rule is that the properties involved in the transaction (the property you sell and the property you buy) must both be held for productive purpose in trade or business or as an investment and they must be “like kind.”
The 1031 exchange rule also sets a guideline for the proceeds of sale. The proceeds from the sale must go through the hands of a qualified intermediary and not through your hands or the hands of one of your agents or else all the proceeds will become taxable. According to the 1031 exchange rule, the entire cash proceed from the original sale must be reinvested towards acquiring the new property. Any cash proceeds from the sale are taxable if they are retained.
The 1031 exchange rule requires that the replacement property must be subject to an equal or greater level of debt than the property sold or the buyer will have to pay the tax on the amount of decrease or he will have to put in additional cash to offset the low debt amount on the newly acquired property.

Spectrus Real Estate - The 1031 Exchange IRS Rule

Under the 1031 Exchange IRS rules, relinquished property must be qualifying property. Qualifying property is property held for investment purposes or used in a taxpayer's trade or business. Investment property includes improved or unimproved real estate, held for investment or income producing purposes.

Under the 1031 Exchange IRS rules, replacement property title must be taken in the same names as the relinquished property was titled. If a husband and wife own property in joint tenancy, the replacement property must be deeded to both spouses, either as joint tenants or as tenants-in-common.

In order to qualify under the 1031 Exchange IRS rule, the replacement property must be “Like-Kind." For real estate exchanges, like-kind replacement property means any improved or unimproved real estate held for income, investment or business use.

Any boot received in addition to Like Kind Replacement Property Will be Taxable (to the extent of gain realized on the exchange), under the 1031 exchange IRS rule. Boot should be avoided in order for a 1031 Exchange to be completely tax-free.
The term "boot" is not used in the Internal Revenue Code or the Regulations, but is commonly used in discussing the tax consequences of a Section 1031 tax-deferred exchange. Boot received is the money or the fair market value of "other property" received by the taxpayer in an exchange.

Spectrus Real Estate - $55 Billion Tour Recap

Spectrus Real Estate, a leading provider of investment real estate in the United States, just wrapped up a five-city $55 billion tour to introduce its new Net Lease PLUS™ program to the commercial real estate brokerage community.

Those who attended learned about doubling their real estate income in 2008 through the many benefits of the Net Lease PLUS™ program:

• Owner receives contractually guaranteed*, fixed monthly rental payments – typically a 6% to 7% annual average

• The risk associated with single-credit tenants is mitigated

• Tax benefits with extraordinary stability

• The lessee manages the property and pays all the taxes, insurance and maintenance expenses 

• Innovative master lease – backed by a 29-year-old successful company

• No cap on potential appreciation

“The events have been first class,” said Mickey Davis, Eastern Region Vice President of Sales for Spectrus. “The presentation material is impactful and straight forward, very compelling.”

If you weren’t able to attend the tour, you can still take advantage of the unique Net Lease PLUS™ program. All you have to do is contact a Spectrus sales executive today. 

* Guarantee is backed by DBSI Inc. and is a guarantee of lease payments only.

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Spectrus Real Estate - Like-Kind Property

In a 1031 like-kind exchange you can exchange any real property for any other real property within the United States or its possessions if said properties are held for productive use in trade or business or for investment purposes. Examples of 1031 like-kind exchange property include apartments, commercial, condos, duplexes, raw land and rental homes*. As used in IRC 1031(a), the words "like-kind" mean similar in nature or character, notwithstanding differences in grade or quality. One kind of class of property may not, under that section, be exchanged for property of a different kind or class. Examples of qualified 1031 like-kind exchange properties and like-kind  exchange

• apartment building for farm/ranch
• office building for hotel
• raw land for retail space
• unimproved property for commercial property
• airplane for airplane

Examples of non like-kind properties include primary residences, stocks and bonds, notes, partnership interests, developed lots held primarily for sale and property to be resold immediately after initial purchase or completion of improvements.

        * Qualification for Section 1031 exchanges depends upon the extent of  personal use.

Spectrus Real Estate News

Read our articles, press releases, and updates about investment real estate solutions with Spectrus, including information on 1031 exchanges, Net Lease PLUS, and other opportunities. Our website and blog is routinely updated investment real estate and 1031 exchange information for more information about Spectrus Real Estate.

Spectrus Real Estate - 1031 Exchange Resources

As 1031 exchange specialists, Spectrus Group specializes in 1031 exchange properties. We provide investment real estate solutions that can help you maximize capital gains and defer capital gains tax.

A 1031 exchange, also known as a 1031 Like-kind Exchange or Starker Tax Deferred Exchange, is the process where a real property owner can sell certain property and then utilize the proceeds to purchase ownership in like-kind property and defer the capital gains taxes. To qualify as a like-kind exchange, property exchanges must be done in accordance with the rules set forth in the tax code and in the treasury regulations. The 1031 exchange can offer significant tax advantages to real estate buyers.       

The reasoning behind the 1031 exchange is that since the taxpayer is merely exchanging one property for another property (or properties) of “like-kind” there is nothing received by the taxpayer that can be used for paying taxes. As a result there can be tax advantages to real estate buyers as the gain is locked up in real estate and so no gain or loss can be claimed. Generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized under Internal Revenue Code Section 1031.

Example of a 1031 Exchange

An individual purchases or buys a commercial property such as an office building for $200,000.         After five years, he or she sells the property for $250,000. This would result in a gain of $50,000 on which the individual would have to pay a capital gains tax, but, if he or she utilizes the proceeds from the $250,000 sale to purchase or buy another property, then he or she would not have to pay any taxes on the gain at that time.       

More 1031 exchange information is available at the Spectrus website or by calling 1-866-587-7328.