Covenant Ranch | 20

SURFACE AND MINERAL MANAGEMENT

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R A N D Y W E S T Z A N D R A D U K E

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H EHEL LI IC O PCOPT E RTERS S H HO ON DNDO O, , T XTX

W IWIL DLDL ILIF FE E S SU RURV VE Y SEYS | | W WI LILD L IDLIF EFE C A P TCAPTU RURE SES | | H HO GOG H HU N TUNTI IN GNG

W E SWES W Y R I C KWYRICK H E L I C O P T E RHELICOPTER P I L O TPILOT 8 32. 797. 35 8 9832.797.3589

TRIPLE F RANCH

160 +/- Acres

Junction, TX Kimble County Hill Country, tx

Double J RANCH

1,372 +/- Acres Dimmit County

Property Description

The Dimmit County Double J Ranch is synonymous with south Texas and trophy white-tailed deer. Owned by the founder of Texas Trophy Hunter Association, Jerry Johnston, this ranch is finally available for the true white-tailed deer enthusi- ast. Jerry has decided to sell his beloved Double J ranch, located in the heart of the Golden Triangle on FM 468 between Cotulla and Big Wells, in Dimmit County. This 1372 acre high-fenced, red soiled jewel has been under intensive white-tailed deer management for over twenty-five years, supplemented with continuous and highly sought-after, genetically superior, stocked white-tailed deer from Jerry’s own breeding facilities. The ranch is currently under wildlife exemption and MLDP. This property is being sold as a complete turn-key operation including all blinds, feeders, furniture, and furnishings. The new owner will only need to bring his clothes and groceries!

TOP MISCONCEPTIONS ABOUT 1031 EXCHANGES FOR 2021

By IXP 1031

Pictured: Rock Cli Ranch, Bandera County

For 2021, here are our latest top misconceptions we’ve found that the public has about 1031 Exchanges.

1. 1031 Safety in Tax Reform 2. Like-Kind Property 3. Vacation Home Usage 4. Reverse Exchange 5. Reinvesting Proceeds and Replacing Debt 6. Partially Tax Deferred Exchanges 7. Identi cation Rules 8. Penalties 9. IRS Filing 10. Partnerships & LLCs 11. Improvements 12. Starting an Exchange

1031 EXCHANGES

1031 in Safety in Tax Reform Threats to repeal or cut 1031 never make it through tax reform proposals and bills. FALSE

The threat of 1031 limits or even repeal is real. Currently, the latest proposal caps deferral at $500,000 (single taxpayer) / $1 million (married taxpayers ling jointly). IPX1031, the Federation of Exchange Accommodators together with many individuals, companies and trade associations representing many diverse industries are actively educating and advocating our federal legislators in Washington D.C. What can you do? It is important that Congress hears your voice – and more than once. Click here to send an electronic letter to your U.S. Senators and Representative in the House.

Like-Kind Property If I sell an apartment building, I must buy another apartment building because of the 1031 “like-kind” requirement. FALSE

The “like-kind” requirement does not mean selling and buying the same exact type of property. In an IRC §1031 transaction, you can exchange real property for virtually any other real property in the United States, as long as the property is held for productive use in a trade or business or for investment purposes. The term “like-kind” refers to the nature or character of the property, not its grade or quality. For this reason, nearly all real property is like-kind to all real property. You can sell an apartment building and exchange it for a strip mall, a warehouse, an o ce building, a vacant lot, farmland, etc. Vacation Home Usage Vacation and second homes have been a hot investment especially during the pandemic. I’ll sell my investment real estate and buy a vacation home that I can enjoy with my family during the summer months. Since it’s my investment property it quali es under the 1031 rules. FALSE

You can sell your investment real estate and reinvest the gain, tax deferred, to purchase your vacation or second home, the challenge is making sure it will qualify as a 1031 investment property. Meaning that during the initial 24 months of ownership there are strict rules to follow regarding personal use. The important rule is that you can only use the property for 14 days each year or 10% of the actual days that you rent it out. For example, if you lease it for 200 days each year, your personal use can be up to 20 days. If you are able to abide by these rules, after two years the dream vacation home is yours to use as often as you like without any more requirements. Check with your tax advisor and click on the links below when considering a vacation home or second home as a new Replacement Property to complete your 1031 Exchange.

Reverse Exchanges Reverse Exchanges are quick and simple – I just buy my new Replacement Property rst, then sell my old Relinquished Property by year’s end. FALSE

The concept of buying rst/selling second is correct, but Reverse Exchanges are not simple nor quick. Many exchangers do not realize that when the new property is acquired, IPX1031 (through an a liated entity) needs to be the title holder of the old Relinquished Property or new Replacement Property. You cannot own the Relinquished Property and the Replacement Property at the same time. Due to this requirement, Reverse Exchanges take longer to structure and because there are more steps and increased complexity, there are additional costs and fees.

Reinvesting Proceeds and Replacing Debt I only have to reinvest the pro ts from the sale of my old Relinquished Property to fully defer my taxes in a 1031 Exchange. FALSE

For a full deferral of taxes, you should follow three rules: (Continued on Page 31)