Last Updated June 08, 2018

Law and Practice

Authors



Allen Matkins Leck Gamble Mallory & Natsis LLP is best known for representing clients in the real estate industry and clients for whom real estate is an important part of their success. It has a longstanding reputation as one of the leading real estate law firms in the United States, having assisted clients in the development, management, financing, acquisition and disposition of real property assets. Because Allen Matkins has one of the largest real estate departments on the West Coast – more than 100 attorneys – it can bring to every deal a vast network of resources and relationships with major players in the real estate industry. Key clients include global real estate owners, operators and developers, REITs, private equity firms, state pension funds, life insurance companies and Fortune 100 technology companies. The firm's five offices are located in four major metropolitan areas of California: Los Angeles (Downtown and Century City), Orange County, San Diego and San Francisco.

California counties and most cities levy a transfer tax whenever 50% or more of the interest in a property is sold. It will almost always apply to a fee-title change of any real property. In most jurisdictions, sellers pay the transfer tax, which ranges from 11 to 56 basis points in most California jurisdictions. While an outlier, the City and County of San Francisco impose transfer taxes of 300 basis points, or 3% of the purchase price.

An exception occurs under an IRC 1031 exchange, which allows an investor to defer revenue recognition and avoid capital gains taxes if the proceeds are invested into replacement, like-kind property within 180 days.

If an investor desires to acquire a replacement property before selling its current investment property, it can engage in a reverse exchange. Essentially, this involves lending funds to an “accommodator,” which purchases the property the investor would like to acquire, holding it until the investor can sell its current property and then using the subsequent sale proceeds to pay off the loan. In that case, to avoid a second set of transfer taxes, the investor then provides documentation to the county tax authorities to establish the reverse exchanges in a single transaction, done in two stages.

Allen Matkins Leck Gamble Mallory & Natsis LLP

865 S Figueroa Street, Suite 2800
Los Angeles, CA 90017

(213) 622-5555

(213) 620-8816

communications@allenmatkins.com www.allenmatkins.com
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Authors



Allen Matkins Leck Gamble Mallory & Natsis LLP is best known for representing clients in the real estate industry and clients for whom real estate is an important part of their success. It has a longstanding reputation as one of the leading real estate law firms in the United States, having assisted clients in the development, management, financing, acquisition and disposition of real property assets. Because Allen Matkins has one of the largest real estate departments on the West Coast – more than 100 attorneys – it can bring to every deal a vast network of resources and relationships with major players in the real estate industry. Key clients include global real estate owners, operators and developers, REITs, private equity firms, state pension funds, life insurance companies and Fortune 100 technology companies. The firm's five offices are located in four major metropolitan areas of California: Los Angeles (Downtown and Century City), Orange County, San Diego and San Francisco.

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