I don't know if it makes any difference, but our 1031 adventures have all been within a separate trust that was established by my late mother, of which I am trustee with power to appoint. The trust sold one property. The trust bought a second property using 1031 exchange laws. The value of the property is now more than 12 times the base cost -- a very hefty capital gain even at the current 15% rate. I know we could sell and reinvest only a portion, and pay taxes on the rest. I know I could appoint this property out of the trust to, say, our DS and DIL or our DGS (age 2). What I'm wondering is if it isn't best to let them "inherit" the trust holdings. What I don't know is if they will also inherit the tax base or if the 1031 property resets to date of inheritance.

Thanks all, your insights are very interesting. Makes sense too. I have a Fl waterfront story, about my husband's uncle. He and his father (husband's grandfather) were small-scale developers in Miami during the post war boom. In the very early 70s uncle and grandpa bought property in Key Largo and moved down there, building side by side modest stilt-style homes next door to each other. At the time the Keys were still remote-they had to dig their own wells for water for example. Uncle raised his family there, parents lived out the last decade of their lives next door. The uncle died a couple of years ago. However the land is going to be somebody's jackpot someday when the property is sold. Uncle (who inherited grandpa's share) owned *9 acres* of oceanfront property. It's actually one of the largest pieces of undeveloped land in the Fl keys, and he regularly got offers from hotels and resorts in the range of 10-15 million dollars. It was always a trip to go down for family parties. You would turn off the main road (US 1 for those who know the Keys) into the property which was just a bunch of scrub, nothing landscaped. Then down the looooooooong drive (crushed shells, never even paved) to the houses. They were small, not particularly well kept up but were directly facing the ocean. The area around the houses was always full of junk; old boats, cars/trucks that didn't run, rusting outdoor furniture etc. All of that next to the most glorious sea vista you could imagine. Amazing. As I said, it will be an interesting process when the property is eventually sold. Uncle had 4 daughters and one son and left everything to sonny. However, my husband's cousins are some pretty strong women and the uncle's plan that his only son inherit and keep everything is probably not going to fly once the big bucks start being offered. Oh, and many years ago my MIL TURNED DOWN a piece of waterfront property down there that her father offered her as a vacation spot. Crazy woman :). Ann

Hi & Welcome to the Forum... "Commercial" real estate is a very broad topic. It covers everything from a simple duplex you intend to rent out to large, multi-anchor shopping complexes or the Empire State Building. They are handled differently. It would help if you could be a bit more specific in what you're looking to purchase? As just general statements: 1. Large real estate brokers have commercial divisions (Century 21, Prudential, Re/max, etc.). Residential agents do not sell much commercial property except for small residential rentals. 2. A lot of commercial real estate is sold as an "operating concern" (Part of the purchase of a business, for example). 3. Major metro area newspapers have a few commercial properties in the real estate section. 4. A broker is a good idea because you will need to deal with zoning and other governmental agencies. 5. Financing is also different. If you intend to finance the property, you'll need a commercial loan officer. At large banks, these guys usually have their own private offices & receive commissions in addition to their base salary. They are higher up the food chain than residential loan originators/officers. (I hate to admit it but many often act the part too. rofl) There are also commercial loan brokers. They also get a commission. 6. Attorneys are always involved in commercial real estate transactions. But, usually not until you've decided on a property. Commercial loan documents are not like residential. Residential loan docs are standardized. Commercial docs are individualized. You'll have things like Loan Agreements and, probably, UCC filings in addition to the Promissory Note & Mortgage/Deed of Trust. The attorney for the lender draws up the docs & your attorney will review & explain them to you. Your counsel will also attend the closing. Properties I can suggest you be cautious with are drycleaning establishments, any type of auto repair facility, restaurants, and two-story "strip" centers. I don't know of a "Commercial Real Estate for Dummies" book or web site, unfortunately. Anyway, it would help to know what type property you're looking for. Tricia

Two factors make up my tax bill: 1) the assessed value, 2) the year's tax rate for each taxing body (county, town, schools, library, whatever). If residential is the only base, the rate will be higher than if commercial properties carry some of the load. In my county they assess annually. This is a superior way to finance government because it reflects current values. We have lived in Cook Co. which assesses a third of the county each year because it is so large. Our assessments are made on a township level, based on a valuation of all similar properties within a neighborhood(size, exterior construction material, etc. and land value). When a house sells, that price goes into the mix, lifting median assessments for the whole neighborhood. (I am not thrilled by the teardowns happening around me -- small ranches on large lots being replaced by BIG homes mean higher assessment on my house.) The only disadvantge I see to you as a buyer would be if you wanted to protest your assessment. How could you justify a complaint if you've just paid more than the assessed valuation? I always protested our assessment in Cook Co. because there were properties nearly identical to mine that were under-assessed; they had to reduce mine.