WOW!!! Did you see the new Money Magazine?  They have ranked St. Simons Island #2 in the COUNTRY for places to retire!  You can see a snipit here: http://money.cnn.com/magazines/moneymag/bpretire/2006/

However, they left out 2 other very good reasons to retire here: if you establish this as your primary home, the assessed value of your home is LOCKED IN, so increases in your taxes are moderated which is very important for most retirees.    Additionally, while they point out that we are on the coast and subject to hurricanes, they neglect to mention that if you are looking to retire on the coast, there is probably no safer place.  When America's richest of the rich decided to purchase an island in the late 1800's for their winter retreats, they selected one of the westernmost points of the eastern seacoast.  They chose Jekyll Island, a sister island easily visible from the southend of  St. Simons Island .   Historically, our location has sheltered us well.  I've lived here since 1985, and my family in WV has had much more damage from hurricanes there than we have here on St. Simons Island.  Of course we could get hit with a hurricane tomorrow, but what location is immune to a disaster?  Overall, we're tucked in from the Gulf Stream, so if I'm going to be on the coast (and I am!), I want to be here.

I just returned from a 3-day asset protection and wealth development seminar.  Did you know that more wealth has been created through real estate investing that through any other avenues?  Donald Trump?  Real estate!  John D. Rockefeller?  Real Estate!  But investing in real estate is not a simple procedure.

As I read the Rich Dad/Poor Dad series, one thing that popped out to me as a key to wealth development is being able to know the difference between a liability and an asset.  If you purchase a new car, that's a liability because the car will lose value as soon as you drive it off the lot, and will continue to lose value until it zeros out.  But on the other hand, if you buy a lot, that's an asset because the theory is that it will continue to increase in value.  But in our society, which is more glamorous?  Hmmm....

This seminar focused on protecting assets from lawsuits and taxes, while at the same time, creating wealth - not an easy task!  Question::

1) if you have 1 penny and it doubles in value every day for 30 days, how much money would you have after 30 days? 

Answer:  $5,368,709

BUT,

2) if you had 1 penny and it doubled every day for 30 days, and you paid 15% tax on the growth each day, how much money would you have after 30 days?

Answer: $559,732!!!

So, do you think it matters to watch your pennies???  I LOVE this stuff!  I could go on and on, but in the interest of time, I'll stop now.  If I've encouraged even one person to think about the future, I'm a success!  I know you're not counting on Social (In-)Security in your old age! 

This seems to be the year for buyers who are making offers on property they have not seen.  Last month, I closed on a condo that a nice young couple from Ohio bought sight unseen (of course I had sent them many visual tours of the property and of the area).  I also wrote an offer for a couple in California on a house in Brunswick.  Not only had they not seen the house, they had never been to Brunswick! 

Apparently, this area is becoming very well known worldwide.  What is it about this area that is so appealing?  Well, to start, there's the beach.  Glynn County is the only county in the Golden Isles where you can drive to the beach.  Our neighboring county to the north and to the south both have lovely rivers and marshes, but if you want to see the ocean, you'll have to take a ferry or boat to one of the barrier islands.  Here, you can drive right to the beach on Jekyll Island, St. Simons Island, or Sea Island (although the beaches on Sea Island are private.)

We have marshes, rivers, marinas, temperate climate, and we have jobs!  Our economy is not based just on tourism, although we are a very popular tourist destination.  We have many jobs in the food/hotel industries, and we have some of the best restaurants in Georgia.  Our tourist seasons are extending from winter (snow birds) to spring break to summer (beach time!) to fall football (GA/FL) right back to the snow birds again!

We are the home of the Federal Law Enforcement Training Center that employs many federal workers as well as contract employees.  We have a large Georgia Pacific plant, a Hercules plant, and many smaller, but thriving businesses.  Gulf Stream retrofits planes here, and our many golf courses make it a very popular for retirees.

Like to fish, boat, golf, play tennis, or travel?  Everything is here.  No wonder I'm getting e-mails from all over the world requesting more information on the Golden Isles.  It's truly a wonderful place.  Come visit, and say "hi" when you're in the area.

If you own a rental or investment property that will produce a large taxable capital gain when you sell that property and want to avoid paying capital gain tax on your profitable property sale, read on...

Many investors want to know how to avoid paying capital gains tax when selling their investment properties, and see realize that this is a fundamental necessity for wealth building.  One of the first documented examples of how this initially worked can be found in How I Turned $1,000 into $5 Million in My Spare Time, by William Nickerson, who pyramided his way to wealth without allowing tax to erode his profits.

To avoiding capital gain tax when disposing of a rental or investment property, you must trade "equal or up" in both price and equity for one or more qualifying "like-kind" properties without taking out any taxable "boot," such as cash or net mortgage relief as authorized by Internal Revenue Code 1031.

Bob Bruss, a successful real estate investor, states: "I shall never forget my first tax-deferred exchange years ago. I owned a three-unit apartment triplex in which I had a modest capital gain. After reading Nickerson's great book, I had dreams of pyramiding my way to a real estate fortune.

My first step was to make a tax-deferred trade of my three units for a nine-unit "fixer-upper" apartment building worth about three times as much as my old property. But the sellers of that building wanted to retire; they didn't want my triplex.

So my savvy real estate agent found a "stand-by buyer" for my three units after I made my tax-deferred exchange for the nine apartments. I got my tax-deferred exchange, the seller of the nine apartments got a taxable cash sale, the stand-by buyer acquired my three units, and we all lived happily ever after."

TODAY'S TAX-DEFERRED "STARKER EXCHANGES" ARE MUCH EASIER.

Today, investors no longer have to make swap property for property.  Now, a third-party accommodator or intermediary holds the sales proceeds, and then that money is used to purchase the new investment properties. 

However, there are strict Starker-exchange time limits. When the first property in a Starker trade is sold, the sales proceeds must be held by a qualified third party.  The investor has up to 45 days to identify up to 3 properties to his intermediary as the property to be acquired. For this reason, it is wise to have the "up leg" of the exchange lined up before selling the old property.  The investor can take up to 180 days from the sale date to complete the tax-deferred acquisition.

The trades do not have to be equal; for example, an investor can trade a rental home for an apartment building, or an apartment building for a commercial complex.  Vacant land can also be used in 1031 exchanges as long as it is held for investment or for use in a trade or business.

WHY USE A 1031 TAX EXCHANGE?  Obviously, the primary reason to use this tool is to avoid the capital gains tax on the profit. But according to Mr. Bruss, there are at least 10 other reasons to exchange:

• pyramid your investment property equity without tax erosion of your sale profit
• minimize or eliminate the need for new mortgage financing on the property acquired
• acquire more desirable property to replace an undesirable property
• increase your depreciable basis
• acquire a property that better meets your investment or business needs
• partially defer your profit tax while trading down to a smaller property that is easier to manage
• avoid the dreaded 25 percent depreciation recapture tax when selling an investment or business property
• refinance either property before or after (but not during) the exchange to take out tax-free cash 
• accept an unexpected desirable purchase offer to sell a currently-owned property and avoid capital gain tax, and
• completely avoid capital gains tax by still owning the last property in your pyramid chain of tax-deferred trades when you die.

WAIT A MINUTE... CHECK OUT THAT LAST REASON... "COMPLETELY AVOID CAPITAL GAINS TAX BY STILL OWNING THE LAST PROPERTY IN YOUR PYRAMID CHAIN OF TAX-DEFERRED TRADES WHEN YOU DIE"!!!  

Savvy real estate investors have figured out how to make tax-deferred exchanges of their investment or business properties for their ultimate retirement home. However, personal residences don't qualify for the 1031 tax-deferred trades because they are "unlike property," so how does it work?

If you know where you want to retire, you can use this avenue to "trade up" to your dream home!  Since a personal residence won't qualify (it's not being used as a trade or business), if you find your "dream home", you can purchase it as an investment if you offer the property for rent for at least 12 months after the purchase (per most tax advisors.)  Then you can move in, and convert it to your permanent residence!

Beware, to take advantage of the principal residence sale tax exemption of up to $250,000 for a single owner or up to $500,000 for a qualified married couple filing a joint tax return, the home obtained via a 1031 exchange must be owned at least 60 months before sale (rather than the minimum 24 months of ownership ordinarily required). And the owner must occupy at least 24 of those 60 months to qualify for the IRC 121 exemptions.  But if it's your retirement home, that should be no problem.

DEATH: THE ULTIMATE TAX SHELTER! However, if you acquired your ultimate dream home, and maybe even millions of dollars of investment property, in tax-deferred exchanges which you still own at the moment of your death, you will have achieved the ultimate tax shelter of all.   The government will completely forgive any capital gain tax or depreciation recapture tax that would have become due if you sold your real estate the day before your death!  However, the net worth of your real estate (market value minus secured debt) will be included in your estate. For deaths after Jan. 1, 2006, total estate net assets less than $2 million are fully exempt from federal estate tax. Also, assets left to a surviving spouse are free of the federal estate tax.

Even better, your heirs will receive a new "stepped-up basis" market value which will be the value of the property on the date of your death for the assets they inherit. For complete details, please consult your personal tax adviser.

* Thanks to Bob Bruss for inspiring this via his "How Investors Avoid Profit Tax" e-mail!