July 31, 2014
--San Diego, California--Exeter 1031 Exchange Services, LLC announced today that the California Franchise Tax Board ("FTB") has issued guidance regarding the reporting requirements for California Like Kind Exchanges when investors sell relinquished property located in the State of California and reinvest through a 1031 Exchange by acquiring replacement property outside of the State of California. 

California Claw-Back Requirement

California has historically taken the position that any capital gain earned on California real estate should be subject to California tax upon the ultimate sale of the real property even if the investor had sold his or her California real estate and subsequently 1031 Exchanged into investment property located outside of California.  In other words, they 1031 Exchanged out of California real estate and into non-California real estate.  This has been named the "California Claw-Back."  However, there had not been any mechanism for tracking the subject real estate in order to enforce the California Claw-Back Provision — until now.

California State Assembly Enacts Legislation

The California State Assembly recently signed legislation into law that requires investors who complete a 1031 Exchange transaction where they sell California real estate and buy non-California real estate as their replacement property file an annual information return with the California Franchise Tax Board (FTB) reporting their like kind exchange into non-California real property.

California Franchise Tax Board Issues Guidance on Reporting Requirements

The California FTB issues new requirements for reporting California Like Kind Exchange transactions, including its new FTB Form 3840 — California Like Kind Exchanges.  The new California Form FTB 3840 will be required for taxpayers who complete a 1031 Tax Deferred Exchange after January 1, 2014 when they sell relinquished property in California and purchase replacement property outside of California. 

New Law Effective January 1, 2014

The new law applies to any 1031 Exchanges of real property that close in any tax year beginning on or after January 1, 2014 (i.e. after December 31, 2013).

You can read the entire article here

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Exeter 1031 Exchange Services, LLC is a leading national provider of Qualified Intermediary, Exchange Accommodation Titleholding, and 1031 Exchange Advisory Services for individual, corporate and institutional clients throughout the United States and the world.  Exeter administers all types of 1031 Exchange transactions, including Forward, Reverse and Improvement (Build-To-Suit or Construction) 1031 Exchange structures, for real estate, personal property and foreign assets. 

Exeter 1031 Exchange Services, LLC currently has national office locations in San Diego, Los Angeles, Newport Beach, Fresno, and San Francisco, California, as well as Colorado Springs, Colorado; Chicago, Illinois; Pittsburgh, Pennsylvania; East Northport, New York; and Springfield, New Jersey.  You can contact Exeter at anytime, 24 hours a day, 7 days a week, 365 days a year.  Call Exeter 24/7 provides round-the-clock access to our Senior 1031 Exchange Advisors when you need them.

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