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The magnificent vistas and ecology of western North Carolina highlands have drawn people here from all over the world for centuries. Large portions of these spectacular mountain ranges are protected by state and national agencies with more than one million acres in the Pisgah and Nantahala National Forests alone. State parks and forests also hold thousands of acres and a number of nonprofit groups, local land trusts and private landowners are dedicated to protecting North Carolina’s precious land and water resources.
Rising real estate markets, overdevelopment and dense population in the north and south eastern areas of the country, where salaries haven’t kept pace with home prices, are steering families, retirees and second- and third-home buyers toward the calm and beauty of western North Carolina. Cool summers, mild winters, unrivaled natural beauty and lower cost of living make western North Carolina an attractive choice for buyers looking for a place to get away from the crowds.
People from southern coastal cities and towns from the Florida Keys to New Orleans are feeling the pinch of rising expenses and the emotional stresses related to living in a hurricane zone. Storm weariness, overcrowding and drastic increases in windstorm and flood insurance may be the breaking points for many who will be looking northward for an alternative to a hectic and expensive lifestyle and a place to calmly rebuild their lives.
(See links to articles below)
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Western North Carolina offers natural beauty, a relaxed and friendly lifestyle and a reasonable cost of living. Add to that an attractive real estate market with favorable tax laws like the 1031 Exchange. This plan offers the investor latitude and an interesting perspective from which to make choices in the market. A variety of properties can be considered “like-kind” which does not refer to the nature, character or type of property, but rather the intended use of the property. Provided the property is initially acquired and held for either business or investment purposes, it can qualify as a suitable replacement property under IRC Section 1031. This applies regardless of whether the properties are improved or unimproved.
In addition to low interest rates and demographics, the second-home market has been helped by the Taxpayer Relief Act of 1997, which established new rules for the treatment of a capital gain on a principal residence. Under the old law, taxes on gains were deferred if the seller bought a new home of equal or greater value up to two years before or after the sale of the primary home. In addition, sellers over age 55 could claim a one-time exclusion of $125,000. But new, liberalized rules repealed the mandatory gain-deferral and raised the exclusion to $500,000 for married couples filing jointly, provided a taxpayer owned and used the principal residence for two of the five years preceding the sale date of the home. Moreover, the exclusion now can be claimed every other year.
In addition to putting more money in potential buyers' pockets, the change has "liberated" sellers from the pressure to trade up to avoid a tax hit. Instead, says an NAR spokesman, it seems to have encouraged some sellers to trade down to more modest digs, while using the remaining proceeds to purchase second homes.
Buyers who get in on today’s western North Carolina land opportunities are truly just ahead of the herd. Large parcels like Mountain Top and Laurel Vista are very rare and getting harder to come by. There is a limited supply of land available for purchase and it is a matter of time before the demand exceeds it.
Links to Articles:
Articles from the National Association of Realtors:
Vacation Homes Arise In Unlikely Destinations http://www.realestatejournal.com/secondhomes/20040728-reed.html
High Demand Raises
Cost of Second Homes
http://www.realestatejournal.com/secondhomes/20040701-bergsman.html
2005 Profile of U.S. Real Estate Marketshttp://www.realtor.org/Research.nsf/Pages/2005ProfileUSREMkts?OpenDocument
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