Preserve Equity, Build for the Future Using a 1031 Tax Exchange
Thinking of trading up on an investment resort property? If so, look into 1031 Tax Exchanges (based on IRS Code Section 1031), which allow taxpayers to defer taxes on capital gains resulting from the sale of investment real estate, often a sizable sum since combined Federal and State taxes can run as high as 38 percent. With an exchange, owners are able to preserve equity, while still selling the property. The underlying concept is that an exchange of like-kind property for like-kind property does not generate funds, which can be taxed since the profits go directly into the new or replacement property. To accomplish this, sellers hire a Qualified 1031 Intermediary (QI) to document the sale as an exchange and to receive the funds from the sale. The QI then delivers the funds directly to the closing agent for the replacement property who deeds the property to the taxpayer. Central to a 1031 Exchange is the interpretation of like-kind property. While the common assumption is that like-kind implies land for land or a condominium for a condominium swap, the interpretation of like kind is actually less literal. Rather, it defines like kind as meaning that both the replacement and the original property must be used as an investment. So land, condominiums, single-family homes and motels can all be exchanged for one another as long as they are used in the exchanger's business or held as an investment. The amount of debt held on the replacement property must be the same as the amount of debt on the original. 1031 Exchanges are complex mechanisms and like all IRS requirements very specific. For example, exchangers have 45 days from closing to identify properties they intend to purchase and 180 days to complete the purchase. Purchase and Sale agreements must include verbiage indicating the intent to affect a 1031 Exchange. The 45-day time frame used to be onerous for sellers. Now, they can opt for a Reverse Exchange, in which an additional third party called "the exchange accommodation title holder" (EAT) acquires title to the replacement property until the original property sells. Reverse Exchanges shift the 45- and 180-day time frame to the selling side of the transaction. With an Improvement Exchange, which also uses an EAT to hold the replacement property, sellers can build investment properties from the ground up or improve existing properties. The improvements have to be built and paid for during the 180-day period. If you are interested in a 1031 Exchange, the first step is to consult your tax advisors as well as an attorney or CPA who is knowledgeable with 1031 Exchanges. Make sure that your real estate professional knows you plan to conduct an exchange and be sure that he or she is familiar not only with the process but also with the specific documentation and time frame mandated by the IRS. This article is intended to inform readers, but does not constitute any financial or legal advice. Neda Dabestani-Ryba is a Realtor in Maryland. She is a member of the President's Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/ Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity. |
Other Trading Tips Articles
Forex Trading Software Foreign Exchange (FOREX) Trading is the trade of international currencies. Because of the different market hours around the world, there are always open opportunities almost every hour of the day. Just like every other industry, technology has shared innovations that allow traders and brokers to continually make transactions. With the continuou ...7 Small Business Marketing Tips Here are 7 low-cost but highly effective marketing tips to help any small business find customers and generate sales quickly.1. Don't Advertise Like a Big BusinessBig businesses advertise to create name recognition and future sales. A small business can't afford to do that. Instead, design your advertising to produce sales . ...Role of Information Technology in Growth of Business Information technology (IT) refers to the management and use of information using computer-based tools. It includes acquiring, processing, storing, and distributing information. Most commonly it is a term used to refer to business applications of computer technology, rather than scientific applications. The term is used broadly in business to re ...Day Trading Basics A means to survive, an avenue to progress and vista to exchange thoughts, ideas and feelings… ‘Trading’ is perhaps as old as human existence on earth. It all began when the primeval man began swapping small useful items with each other in order to live and fulfill many of his needs. The time that followed saw a persistence and enhancement of thi ...Stop Playing Games and Make Some Real Money! If you can play blackjack successfully, you can get an edge over the casino and make money.However, if you are playing blackjack successfully, you can earn far more money in a higher stakes game, with the skills you already have.Blair Hull was a successful blackjack player, and he was famous throughout gambling circles, and making ...Top 7 Finder's Fees Tips Consider the lucrative opportunity open to you in earning finder's fees.A finder is someone who finds something for a person or business. The amount paid for this service is called a finder's fee.Here are seven tips to help you make your fortune in finder's fees.1. A finder simply introduces a buyer to a seller for a fee ...FOREX Currency Systems – Four Tips to Pick a System that Makes Money With the many FOREX currency systems available, you can in theory, simply turn your computer on and follow the signals to generate automatic profits.That’s the theory - but the fact is, there are many FOREX currency systems sold that are obvious scams, and the systems will never work.This article aims to give you tips on picking sy ...New Business - Trading Equity for Cash You awake in the middle of the night with a business idea that will change the world. The only problem, of course, is you need money to get the business moving. What do you do?Investors and EquityPractically every economy is built upon the backs of small businesses and entrepreneurs. Every day someone comes up with an idea that wil ...How Can You Tell Volume is Increasing During the Day? Some days it is easy to tell, you check the volume and it is higher than average or the previous day's volume. Often, however, a stock is making the move you want it to make after the first hour and volume is somewhere below where you want it. How do you tell if you should enter the trade?First, you have to know what volume you are looki ...2006 NFL Mock Draft 1. Houston Texans - RB Reggie Bush USC Reggie Bush is the best player in this draft. Reggie is probably the most exciting and explosive player I have ever seen. Domanick Davis is a good running back, but he isn't so good that they won't draft Bush. A trade down is a possibility, but I don't see that happening. No matter what, Bush will be ...Tips and Tricks on Student Consolidation Loans Though these loans are great for getting hold of the benefits portrayed above, there are many things that must be taken into account when undertaking student debt consolidation that may reduce or boost these benefits. Since knowledge doesn’t take up space, read on and make sure to remember these tips and tricks so you can make the most out of yo ...Young and Single I have had the great fortune of selling a loft right before the Holiday Season to a new and young Client of mine, who goes by the first name of Michael. Michael, who must have told me ten thousand times to call him Mike, has taken me for a tour of all miniaturized condos and lofts available in Downtown Vancouver. In fact, I must confess t ...Tips for Reviving Passion in a Relationship Many couples feel that their relationship starts to lose its passion after sometime. This is mostly because of the fact that they don’t try anything new and feel that they have become bored of everything. What they need to know is that variety is very important for a healthy and passionate relationship. This article will help you discover some o ...Real Time Data Management Real time data management is vital for providing decision-makers in any enterprise immediate insight into changing business events and reducing information delays. This also helps in improving revenue and reducing risks. A wide number of real time data services are available nowadays. They can capture and distribute the data non-intrusively via ...Crude Oil & Unleaded Gasoline – Big Gains Ahead? For around six weeks these contracts have traded in a range, but this may be all about to end.A trade is now presenting itself with great risk / reward which have potential to spike prices to new highs and a 100% profit.Geo Political ConcernsForget all the talk about supply and demand and inflation - Geo political reasons ar ...Corporate Bonds - Is It Safe To Invest In Corporate Bonds? Corporate bonds are like lending money or providing a loan to a business. The lender loans money to a company or corporation, in return the corporation pays you interest on the money that you have lent them. The company that has borrowed the money commits to you or gives you their promise that they will pay back the money borrowed on a pre-arran ...Three Tips for Panic Attacks Nothing can be as terrifying as a panic attack. I've had them on airplanes shortly after takeoff, and embarrasingly had to call a flight attendant over to help comfort me. Over the years I've brought my attacks to a more manageable level with three easy techniques. But don't take my word for it. Try them out for yourself:- Don't fight it. ...Making Outsized Returns in the Stock Market - Using the Dow Theory The Dow TheoryCharles H. DowRobert RheaE. George SchaeferRichard RussellThe Dow Theory TodayCharles H. Dow ...Should You Join an Online Stock Trading Forum? If you're involved in online stock trading then you know how important it is to have timely and quality information. From experience the best way to get this information is to become a member of a good online stock trading forum.Benefits:In any business it's good to be able to discuss things with others in the same field, and if no ...Trading Logic – The Key to Making Huge Profits Fast If you trade any financial market, you will be aware that the majority of investors simply don’t make money. It’s not because they lack trading ability – investors don’t make money because they don’t understand trading logic.A focus on trading logic is essential for any trader who seeks to make money. Forget, opinions and emotions, and fo ...Tips for Long Term Gains: Buy and Hold “If I set for myself a task, be it so trifling, I shall see it through. How else shall I have confidence in myself to do important things?”-George ClasonThere is not a single right way to invest in the stock market. Each investor has his or her own needs, investment styles, levels of risk and income. However there are a few tips, offere ...Automotive Insurance Rates Affected by Your Town? The area in which you live does impact the cost of you automotive insurance. It may seem a bit unfair, but it’s true. Locations that have higher crime rates tend to also have higher automotive insurance rates.Of course, there probably aren’t too many people out there who are willing to shop for a new home in a completely new area, put th ...Arbitrage Trading Profits If you are reading this you must be seeking away to work at home with arbitrage trading. Have you ever even herd of arbitrage trading before? Don't worry most people haven’t. Arbitrage trading is still very new to most people surfing the internet looking for ways to create wealth working online.Arbitrage trading can indeed b ...Harnessing The Power Of Online Trading With all the advances in technology over the past number of years online trading has become one of the most popular ways to trade. Now you can trade from home, from work, and even while on the road.Access To InformationOne of the nicest things about online trading is that you have instant access to market information that yo ...Commodities & Dollar Cost Averaging a Simple Path to Double Digit Returns This has been a painful month in commodity land especially for anyone who bought around May 12, the peak of the most current gold rally. Since then, gold investors have lost 20% from its high of $730/oz to Friday’s (6/8) close of $608/oz. However, those that bought on the last day of this past year have a slightly differently perspective. Gold c ...Online Electronic Day Trading -- 3 Basic Tips Are you ready to start day trading online? Online electronic day trading is becoming more and more popular and there is a lot of money to be made day trading. Are you ready to begin trading online and making money? Here are my 3 basic online electronic day trading tips.Day trading tip #1 – Balance your portfolio.I know you have ...Futures Trading Firms Futures trading can turn out to be a profitable deal if proper research is conducted. It is therefore necessary to approach the right broker who considers the best interests of the trader, before actually going into futures trading. Research has shown that there are almost half a dozen firms operating. They offer an array of services ranging fro ...The Biggest Secret to Successful Currency Trading Successful currency trading looks deceptively simple, yet few traders succeed - despite the fact that there is plenty of material around to show them how. So why is this? - The fact is, much of the conventional wisdom given about successful currency trading, actually leads to the opposite - it actually causes traders to fail.So, let’s loo ...All About Arbitrage - What is Arbitrage in Financial Terms? Imagine an investment strategy that allows investors to take advantage of the difference in the price of a certain market or asset. In other words, the investor would profit from the discounted purchase and immediately resell of the product or share in a different market at a higher price. This investment strategy has been in practice since th ...Technical Analysis in Stock Market Trading The methods used to analyze securities (stocks) and make investment decisions are vast, but tend to fall into one of two categories known as fundamental analysis and technical analysis. Fundamental analysis involves researching and evaluating the characteristics of the company including the evaluation of company financial statements in order to ...Power Dynamics in Relationships Look for the true relationship that exists. And you can extrapolate it to once you have cognition of relational and behavioral elements. It's everywhere.When you see a photo of Angelina Jolie with Brad Pitt following behind her; guess who has the real power and upper hand in that relationship?She OWNS him in that relationship. Yes, ...How To Safely Trade Bonds So That You Actually Make Money Trading bonds can seem a bit difficult compare to stocks, because there's no central exchange for trading bonds. Still, once you learn what you're doing, trading bonds becomes a lot easier.To start, you need a brokerage account. It's your choice whether you go with a full-service broker or an online trading account. Possibly your own l ...Forex Trading Software Dynamic is the most suitable word to describe the forex market. Software that deals with forex trading should also stand up to the level of quality it demands.In the market there are two types of Forex trading software available: ‘Web-based software’ and ‘desktop software’. Choosing one of them depends primarily on security and also on yo ...
|
