J.F. Brown Real Estate

House and Garden Tours presented by the Garden Club of Virginia
April 16-23, 2011
For More Information: www.vagardenweek.org

I was reading, the other day, some of the provisions of the new tax law and how it will affect the 1031 exchange. By all appearances the law should have a positive effect on exchanges of real estate. The major areas of concern for most people were the rates and treatment of capital gains, the tax free exclusion amount for estate and gift taxes and the stepped up basis for inherited property. The tax rates for capital gain has remained the same for real estate at a 15% maximum. For estate and gift tax there is an exclusion of $5,000,000 per person and for amounts over $5,000,000 there is a tax rate of 35%. One of the most important provisions of this estate tax provision is that real estate is inherited at the stepped up basis at a market value reflective of the time at which the properrty is inherited and not based on the value of the property when it was originally purchased by the decedent. Therefore, an exchanger can continue to defer capital gains by doing an exchange and leave the property to heirs without any income tax on the deferred capital gain. The result is that the heirs will pay no income tax on the previous gain as they will recieve the property with a tax basis at its current market value. If the heir sells the property immediately there will most likely be no capital gain. These provisions will be in effect until the end of 2012.

As always it is prudent to check with a tax professional to determine how the tax law will affect you. 

      Do you live in Rockbridge County or Lexington, Virginia? Are you thinking of moving here? A great way to learn about and understand your community is to understand a little of the history that has shaped the present.  Our area is filled with fascinating history.  Some of it is well known.  For example, think Civil War, Robert E. Lee, Stonewall Jackson, or George C. Marshall, Washington and Lee, and Virginia Military Institute, to name but a few topics. And, some history is obscure. But much of it is interesting if presented in a way that dusts off the old and brings it alive.

      I just came across a great bit of history, told in a story telling format that does brings the past alive. In fact, were it not for the author, I believe many of these stories would be lost.  It’s a great book by Dr. Horace Douty called: “Rockbridge County: History Lessons form a Country Church.”  I’ve heard that Dr. Douty, the minister at Oxford Presbyterian Church, is a student of history: not just the well known facts about statesmen and campaigns, but the obscure stories passed down through the generations.  He gives an interesting little story each week to his congregation. It informs them of their past and has become quite popular.

      This book is a series of those stories and, I have to tell you, they are quite interesting and revealing. From the first settlers, their survival, the Indians, the Revolution and Civil Wars, industry, education, politics, and local characters, this book gives real insight into our local past.  Even though I am very interested in our history, this book conveys the struggles, tragedies, successes, the daily life, tenacity and humor of those who came here before us as if it just happened. It also points out just how instrumental Rockbridge County and its citizens have been in the very formation of our United States.

      “Rockbridge County: History Lessons from a Country Church” is a very good, informative and, above all, interesting read.  I recommend it highly! The building, hill, or creek you pass everyday just might have quite a story behind it.

 My first showing came a while after I finished my course work and passed my state Real Estate license exam. It also came after numerous tutorials by my first broker. He had never had an agent before. Or if he had, they were no longer with him. I never asked. He was independent and put first things first. One of those first things, I found out, was to go fishing on the James River. He liked to fish. I was expecting to come to work and impress him with my diligence and capacity to learn the intricacies of land and farm sales and to become the best Realtor. That was all well and good but the first, and many subsequent, lessons came during or traveling to and from the river.

I liked to fish, too. But I never imagined answering my wife as to how my day went at work, that I had gone fishing.  She was incredulous but I had to do what my broker required. I didn’t want to lose my first job in Real Estate. This was important training, I realized. He had an island on the James and we even stayed overnight several times in his very rustic cabin. Few times have I slept better than to have the night sounds of the mountains and flowing water act as a lullaby! Later in the Fall, when my wife hoped the fishing would end and the income begin, he helped me get my first turkey while we hunted the same island. If this was slaving away at the office, then I might be willing to put in overtime 7 days a week. I was putting food on the table…it just wasn’t in the norm of a paycheck.

Back to my first showing and the lessons of real estate. We received a call to see property from a gruff Richmond businessman. He had seen an ad about a wooded hilltop parcel with magnificent views. While my broker leaned against the doorframe and watched, I prepared to meet the prospective buyer by collecting maps, deeds, and surveys. I was ready to make my first showing a success! Several days later, I met the fellow at our little office. We piled into my jeep to see the countryside: he in his nice suit and wingtips, me in my khakis, flannel shirt, and hiking boots.

He liked cigars (whether lit or not). His full frame didn’t like seatbelts. He liked to talk. He did not like to listen. Nonetheless, I navigated successfully to the property where we parked and set out to explore on foot. I don’t think he intended to do any walking but my promise of the top and a view encouraged him to come along with me. I pointed out the big trees, the deer trails, and the gentle terrain. As I led the way, slowing to help him keep up, I found a shed antler from the previous year. It was beautiful; with the sculptured gnaw marks of mice and squirrels looking for nutrients. What a powerful sign befitting a lovely property! He was not impressed with the left behinds of deer.

We made it to the top where the view of the Blue Ridge Mountains spread out in all directions. This magnificent scene would soften the heart and mood of anybody! I turned expectantly to see his expression as the vista, in all its grandeur, opened before him. Replying to my exclamation of the view before us, he paused, shifted his unlit cigar from one side of his mouth to the other, caught a breath and said: “If the damn mountains weren’t in the way, you could see forever!”  With that, he turned around and headed for the car. The thought of using the sales technique of “overcoming objections” did not apply; in fact, it did not enter my mind.

This was an important lesson in many respects, one of which was that some sales are best not happening. As I watched him ply his way down the trail, unlike any sidewalk he had ever encountered, I thought of my uncle saying to me: “Son, you can tell a city boy, but, you can’t tell him much!” It was that experience that bolstered my belief and concern that not all people know or care to know about the natural world we live in. I was, and still am, very happy that he had a place he wanted to go back to.

Income my first year was $800.00. That’s $800.00 more than my wife thought I would make. I’m glad she had patience and a teaching job! I still have that antler from my first showing and I regularly sell millions of dollars worth of real estate. My wife doesn’t teach in school anymore. She’s now a broker in our firm and was just elected to be President of the Lexington Buena Vista Rockbridge Board of Realtors. And, I haven’t even taken her out for real estate lessons on the river. We do, however, fish occasionally on the James, the Maury, the Jackson, the Cowpasture, the Calfpasture, and the Bullpasture rivers. If income dries up, we’ll fish!