Claudia Kiernan has been with Bayview 1031, a national financial company formally known as Bayview Financial Exchange Services, for three years. She started out as the business development consultant and was promoted to Southeastern development manager a year ago. She is an attorney, licensed in Florida and New York, who specializes in 1031 exchanges and manages a team of business development consultants in the Southeast.
She also teaches classes and conducts seminars on 1031 exchanges and acts as a resource for the real estate community, both commercial and residential as well as attorneys, certified public accountants and financial planners.
“I’m an education provider,” she said, “so I can give continuing education credits for real estate professionals, attorneys, certified public accountants and financial planners.”
COLLEGE?
Kiernan earned her bachelor’s degree in anthropology from Hunter College and her law degree from Brooklyn Law School.
HER HISTORY?
After college, she worked as an anthropologist at the American Museum of Natural History in New York City for seven years. After law school, she worked in environmental, trust and estates, and real estate law until she moved to Vilano Beach three years ago and joined Bayview 1031.
WHAT IS A 1031 EXCHANGE?
The Internal Revenue Code Section 1031 permits the deferral of capital gains tax on the sale of property held for investment or productive use in a trade or a business.
A 1031 exchange is when you sell a piece of investment property and the proceeds are used to purchase another replacement property within certain timelines. To qualify for safe harbor tax deferral, the sale proceeds must be held by a qualified intermediary between the sale of the relinquished property and the purchase of the replacement property. “If you do 1031 exchange and are going to buy more real estate, you need a qualified intermediary to do the 1031 exchange,” said Kiernan. “You are going to take the proceeds from that one property and roll it into another property. It can be any type of property as long as it is real estate and not your primary residence.”
MISCONCEPTIONS ABOUT 1031 EXCHANGES?
“The biggest misconception is that one of the rules is that ‘the property we sell has to be like kind the property we replace it with’. So they believe, and they are told this by other professionals, that if they sell a lot, then they have to replace it with a lot or if they sell a commercial property they have to replace it with a commercial property, she said.”
“That is not true. All real estate is like kind. You can exchange raw land for an income producing property. They also think that they don’t need a qualified intermediary. They think they can take the proceeds and put it into an escrow account and then put it back into another property and that is not allowed.”
WHAT SHOULD REALTORS DO TO HELP INVESTORS?
Kiernan said there are certain steps that investors need to do prior to closing to qualify for a 1031 exchange, so it’s important for the Realtor to ask if they know about 1031 exchanges and then contact a 1031 professional as soon as the contract is signed.
“Investors usually fall into two kinds of categories,” she said. “Either they don’t know about 1031 exchange or what they do know is wrong. So, that is a terrible call for me to get is that someone failed to mention to the investor about a 1031 exchange and then later they found out about it.”
BEST PROFESSIONAL ADVICE EVER RECEIVED?
“To know your trade really well and continue educating yourself.”
PROFESSIONAL ASSOCIATIONS
Northeast Florida Association of Realtors, St. Augustine Women’s Council of Realtors, Jacksonville WCR, Commercial Real Estate Women of Jacksonville, Jacksonville Bar Association, Amelia Island/Nassau County Association of Realtors, St. Augustine & St. Johns County Board of Realtors and the Jacksonville Real Estate Investment Association.
- by Michele Newbern Gillis