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Date of offer: July 5, 2010 Date closed: ____________________

Agreement to Exchange

First Party: The undersigned. John Parker and/or his assigns and hereinafter called First Party. does agree to exchange to the Second Party the following property:

Description of Property Given by the First Party:

A 4-unit apartment complex located at 2134 West Wilmont Avenue, Savannah, Georgia. Also known as Lot 7 of Block D of West Hill Mont Subdivision Unit A of Savannah, Georgia. Together with all furniture and fixtures as is shown on the attached inventory list.

Said property is subject to the following debt, which will be assumed by the Second Party:

A first mortgage held by First Union in the amount of $7,000.

Payable over a remaining 5 years at 7 percent per annum.

In addition to the above property, the First Party agrees to pay to the Second Party, at the closing, the following:

A cash payment of $20,000.

Second Party: The undersigned. Sid Goldman and/or his assigns and hereinafter called Second Party, does agree to exchange to the First Party the following property:

Description of Property Given by the Second Party:

Lot 20 of Block 8 of Savannah Commercial Park, Savannah, Georgia.

Said property is subject to the following debt, which will be assumed by the First Party:

A first mortgage held by North Carolina National Bank, in the amount of $310,000 payable over a remaining 11 years at 7.5 percent interest per annually. Arid a purchase money second mortgage to be held by Sid Goldman in the amount of $55,000. Said mortgage to be payable interest only at 13 percent per annum, annual installments, with a balloon of remaining principal due at the end of the 10th anniversary of the closing of this exchange. Said note and mortgage to be as is standard to Savannah real estate closings and a blank copy of the note and mortgage are attached. Said mortgage will provide for a 5 day grace period on all payments and no penalty for prepayments of principal. The sole security to be the office building at 91 South River Drive as described above.

All real estate investors know that in most deals there is some give-and-take between the two parties. If the market is a very strong seller’s market, then outright exchange may not be possible since buyers would be numerous. But sellers with a tax problem and the opportunity to qualify for an IRS Section 1031 exchange are well advised to revise a buyer’s offer and to turn the sale into a delayed exchange so they can reinvest the proceeds from the sale without having to pay any capital gains tax.

  This procedure must be accomplished with all the IRS rules carefully followed. Any seller of an investment property (if it isn’t the house or apartment where you live, and it is not inventory that you buy and sell, it is investment real estate) may qualify. If there is a large capital gain and you are not sure if you will qualify, ask an accountant or tax lawyer who Is knowledgeable about’ the IRS code 1031 provisions.

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