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Realtor Jenny Heinzen sold six Paso Robles AVA vineyards totaling over $20 million with an average sales price of $3.4 million to savvy locals and lifestyle buyers in the past nine months.  Neither the COVID-19 pandemic or conventional wisdom have dampened the market for desirable Central Coast agricultural properties. Heinzen’s current premier Paso Robles listings include Kenneth Volk Vineyards winery facility and 150 acre vineyard on Truesdale Road—plus a confidential vineyard opportunity with over 1,000 vineyard acres available for $25 million.  

Overview A 1031 exchange allows an investor to avoid paying capital gains taxes when selling an investment property by reinvesting the proceeds from the sale to another investment property.  There are 7 general principles outlined below to qualify for this type of transaction. 1st Requirement: Property gained must be of “Like-Kind” to the property sold in nature or characteristic. For example, if you sell an apartment building, you have to “replace” that investment with another type of investment property like farm land, a commercial building, vacant land or industrial property. You could not replace it with an investment in artwork; it would not qualify as “Like-Kind”. 2nd Requirement: An investor has a 45-day period to locate and designate the replacement property, or properties. 3rd Requirement: An investor then has 180 days after the original sale to complete the purchase transaction of that replacement property. 4th Requirement: Use of a qualified intermediary. This is a person or company used to facilitate the exchange by holding the funds used in the transaction during the 180 day purchase period. 5th Requirement: Mirror image on title must apply. If John Smith was the sole owner of a property, he could not then use a 1031 exchange to purchase the new property with a partner. Ownership of property being sold must match ownership of property being acquired. 6th Requirement: The new property must be of equal or greater value in order to defer the full capital gains tax, and all cash profits must be reinvested. 7th Requirement, Reverse Exchange: A reverse exchange is used when the investor has found a new property he/she wants to acquire (and does not want to let it slip away), but has yet to find a buyer for the original property. The IRS guidelines for this type of transaction state you may purchase the new property (cash transaction preferred) and the title will be held by a “qualified parking arrangement” until the old property is sold within the 180 days.

Grape Encounters show guest Jenny Heinzen shares important information about different business models. Some people may want to limit themselves to growing and selling grapes. Others may buy their grapes elsewhere but produce wine in their own winery. Others will elect to take on all aspects of winemaking. One thing is certain, before you take the plunge, you need to spend some quality time with a pro like Jenny, because mistakes are costly but doing it right can be life-changing in the most positive ways!