While we’re looking at lists, the Urban Land Institute recently published its Best Investor Bets for 2010. The list is full of the usual suspects – New York, Washington DC, Austin, Houston. Tucked into the second set of five, however, is our very own Raleigh-Durham. The Institute believes we’ll be successful in 2010 by playing to our strengths as a biotech incubator and our foundation of excellent universities.

This is great news. What makes that even better is that most of the other nine cities are large metropolitan areas [the exceptions are San Jose, which is basically a suburb of San Francisco, and Austin, which is in many ways a clone of the Triangle]. It says a lot for our hometown that we can hold our own when “playing above our weight class”

Like most licensed professions, real estate licensees have to take continuing education courses every year. Some of those courses are mandatory — legal updates and such, and the rest are elective. This year I decided to take a course on 1031 Tax Free Exchanges

A 1031 Exchange [also called a Tax-Free Exchange, a Like-Kind Exchange, or a Starker Exchange] is a mechanism that allows investors to sell their investment property and reinvest the proceeds in another property without paying capital gains tax. You won’t avoid paying the tax entirely, but you can delay paying the taxman until much later. It’s somewhat like doing an IRA rollover — you sell all the assets in your old IRA/real estate and move the assets over to the new IRA/real estate without paying capital gains until you ultimately cash out.

There is an administrative burden. In particular, you need a “qualified intermediary” to manage the transaction [remember the IRA rollover example -- you can't touch the money]. A 1031 exchange, however, is still a great way to manage your investment property both now and in the future.

If you would like to know more about 1031 Exchanges, email me. I’d be happy to refer you to a Qualified Intermediary and help you with the sale/purchase of your investment property.