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Oregon Rent Control Law Informational Presentation 2019 - Rachel McLaughlin, Exchange Facilitator

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Rachel McLaughlin, Exchange Facilitator, discusses how multifamily property owners that choose to sell due to Oregon's rental control Senate Bill 608 can use a 1031 Exchange when acquiring a new investment property .

Disclaimer: This presentation is meant to answer general, broad questions about the changes to Oregon Rent Control Senate Bill 608 (“SB 608”). Landlords should consult with an attorney before taking any action as it relates to End of Tenancy/Non-Renewal Notices and/or increasing rent. All opinions are my own. These statements are not meant to be taken as investment advice.

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Oregon Rent Control Law Informational Presentation 2019 - Rachel McLaughlin, Exchange Facilitator

  1. 1. Zoe R. York, MAI 260 West 12th Avenue, Eugene, OR 97401 (541) 687-1938 / (541) 683-0932 zoe@duncanbrown.com www.duncanbrown.com Rene’ Nelson, CCIM, CRE 895 Country Club Rd, Eugene, OR 97401 (541) 912-6583 rene@1031guru.com www.eugene-commercial.com Rachel McLaughlin Exchange Facilitator Cascade Title Company 800 Willamette Street, Eugene, OR 97401 (541) 687-2233 rmclaughlin@cascadetitle.com www.cascadetitle.com Brian Cox Real Estate & Property Mgmt Attorney Brian Cox Law Offices 142 W 8th Avenue, Eugene, OR 97401 (541) 683-7151 bcox@coxassociates.info www.briancoxeugeneattorney.com
  2. 2. Rachel McLaughlin Exchange Facilitator Cascade Exchange Services
  3. 3. 1031 Exchange Vocabulary  Relinquished Property  Replacement Property  Boot  Capital Gains  Qualified Intermediary / Exchange Coordinator/ Exchange Facilitator/ QI  Safe Harbor
  4. 4. Topics  Why 1031 exchange?  Steps of a successful 1031 exchange  Safe Harbor Rules  Property Identification Rules  Types of Exchanges  Deferred Taxes VS Lifetime Investor  Things to note  Frequently Asked Questions
  5. 5. Why 1031 Exchange?  If your plan is to reinvest into real property, a 1031 exchange allows you to defer the capital gains and reinvest all funds into new investment property instead of paying upwards of 35% in federal and state taxes.  1031 exchanges allow you to keep rolling from investment to investment without realizing any gain keeping your money in your investment portfolio rather than paying capital gains on each sale.
  6. 6. Steps of a 1031 Exchange  Gather your team (CPA, broker, and Qualified Intermediary)  Create an investment plan  List your relinquished property  Start shopping for your replacement property if you haven’t done so already  Once under contract, loop in your Qualified Intermediary with the escrow company  Identify your replacement property/ properties within 45 days of closing on your relinquished property.  Purchase the replacement property within 180 days of closing on your relinquished property.
  7. 7. Safe Harbor Rules  Like for Like  Even or Up  45 Days to Identify  180 Days to Purchase  Use a Qualified Intermediary
  8. 8. Property Identification Rules  3 Property Rule: Exchangor may identify up to 3 replacement properties. Exchangor may elect to purchase one, two, or all three identified properties.  200% Rule: Exchangor may identify as many properties as they desire SO LONG AS the total value of the identified property does not exceed 200% of the value of the relinquished property. Exchangor may purchase any number of identified property.  95% Rule: Exchangor may identify any number of replacement property SO LONG AS the exchangor purchases 95% of the identified properties.
  9. 9. Types of Exchanges  Forward Exchange / Simultaneous Exchange  Sell first, then buy within 180 days  Reverse Exchange  Buy replacement property before the relinquished property has sold  Improvement Exchange (Build-to-Suit or Construction Exchange)  Use exchange funds to improve the purchase property  Build new or remodel what is existing  Multi-Leg Exchange  Exchange from a large property into a number of smaller properties
  10. 10. Multi-leg Exchanges & Combining Exchanges - Combining multiple exchanges to best suit your needs. - Possible combinations: - MULTIPLE SALES & 1 PURCHASE - FORWARD & REVERSE You dream it up and we can work it out!
  11. 11. Deferred Taxes VS. Life Time Investor  An exchangor can keep exchanging from property to property throughout their lifetime.  When the exchangor decides to sell and not participate in a 1031 exchange – capital gains are then due on that sale.  Sale Price – Federal Taxes – State Taxes – Depreciation Recapture = Exchangor’s Proceeds  Some investors keep exchanging on their property and leave the property to their heirs – once the heirs inherit the property, their basis resets and no capital gains are recognized on the sale of the inherited property.
  12. 12. Be Aware…  Title must be identical when exchanging.  John Smith  John Smith NOT John Smith, LLC  Replace debt with debt, not just transfer equity  Primary residences do not qualify for exchange treatment.
  13. 13. Frequently Asked Questions:  Can I extend my timeline?  What if I don’t find a replacement property?  What if all of my identified properties fall through?  What if I do not purchase equal or up in value?  Can I sell two properties and purchase one big property?  Can I exchange my owner occupied duplex?  Can I purchase a vacation home for personal use and also rent it out
  14. 14. Where Do I Go Now? Visit Rene’s Website For Latest Information… Oregon Rent Control Center www.eugenecommercial.com
  15. 15. For further information: Zoe York – zoe@duncanbrown.com (541) 687-1938 Rene’ Nelson – rene@1031guru.com (541) 912-6583 Rachel McLaughlin – rmclaughlin@cascadetitle.com (541) 687-2233 Brian Cox – bcox@coxassociates.info (541) 683-7151

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