Land Development Today - July/August 2007 - (Page 11)

chaser of the taxpayer’s relinquished property, from an exchange perspective. On the other hand, if the EAT acquires the replacement property, then the EAT becomes the seller of the taxpayer’s replacement property, from the perspective of the exchange process. This acquisition of old or new is accomplished by having the EAT step into the chain of title. Stepping into the chain of title has inherent risks, which is why this type of exchange transaction is more complicated, intensively documented and often times “unattractively” priced. Four common situations which legitimize the use of an EAT: • There is no purchaser for the relinquished property, and the acquisition of the replacement property cannot be done on a contingency; • The value of your replacement property is insufficient to fulfill your 1031 exchange obligation, and you do not intend to acquire additional replacement property to make up the “fair market value short-fall,” and you want to make improvements to the property to increase its value; • The property to be acquired from the seller is vacant land, and the taxpayer intends to construct a new facility out of which it will conduct its business; • The taxpayer intends to exchange one replacement property for two relinquished properties – A and B. B will not be sold until after A’s 1031 exchange process expires. In this case, the taxpayer and the EAT would acquire a tenant-incommon interest in the replacement property, at the time of settlement, to ensure that the A and B’s exchanges are exchanged with the replacement property. When should I attempt to avoid the use of an EAT? Unless you need to improve the property, then my answer is always! Weigh your options and analyze your costs before jumping on the reverse ride. What do you have to lose by trying a few tactics that are commonly overlooked? • Offer your seller an incentive payment or larger earnest money deposit; • Offer your seller a short-term lease agreement which contains an option to purchase when your relinquished property is sold. LEAVE THE OLD ROAD BEHIND.> The Road to Higher Performance Begins with Tensar ® BX Geogrids. With rising aggregate expenses, transportation costs and tighter budgets, conventional roadway construction methods can leave you in the dust. Improve pavement durability and increase structural capacity with Tensar Biaxial (BX) Geogrids. BX Geogrids interact with ﬁll to create a stronger composite formation, making them a reliable and economical choice for subgrade improvement and base course reinforcement applications. Overall, road construction is simpliﬁed. Labor and material costs are lowered. And service life is extended. Pave your road to success with Tensar BX Geogrids. For more information, call 866-504-7950 or visit www.tensarcorp.com/s2 for your free copy of SpectraPave2™ Software today. ©2007, Tensar International Corporation, Limited LLC, Inc. 1/2PH-SpecEOLDT4C07. Circle 149 • or www.LandDevelopmentToday.com/adinfo www.LandDevelopmentToday.com 11 http://www.tensarcorp.com/s2 http://www.tensarcorp.com/s2 http://www.LandDevelopmentToday.com/adinfo http://www.LandDevelopmentToday.com

Table of Contents Feed for the Digital Edition of Land Development Today - July/August 2007

Cover Contents Our Voice: Industry Advocates Your Voice: Reader Response Cover Story: Preparing Your Tax Strategy The Rules of the Game Historical Redevelopment Project Profile: Seattle’s High Point Retention: From Ravine to Road Land Use: Picatinny Arsenal Mixed Use: Florida Offices Industry News Products/Services Showcase Classifieds Recommended Reading Advertiser Index Editorial Board The Last Word: What? Me Plan… Urban Development

Land Development Today - July/August 2007

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