Today, we announced the unveiling of our Qualified Opportunity Zone marketplace. The marketplace is a new platform that allows investors to compare Qualified Opportunity Zone (QOZ) investments and provide greater access to a robust selection of QOZ investment funds. The launch represents our latest move to better integrate modern portfolio theory into the real estate investing industry, helping investors to maximize after-tax risk-adjusted returns via tax-optimized and diversified commercial real estate portfolios.
Also known as a 1031 exchange, a like-kind exchange is an IRS-eligible transaction that allows the owner of investment property to defer capital gains resulting from the hold and sale of the property. A like-kind exchange does not completely dismiss the owner’s requirement to pay the capital gains taxes associated with the appreciation in property value upon disposal; it only defers it.
Asset allocation is an important aspect of building a diversified portfolio. It is a strategy in which an investor divides capital among several asset classes, such as stocks, bonds, derivatives, and alternatives. While asset allocation does not guarantee a profit or protect against loss in a declining market, this strategy seeks to manage risk by diversifying exposure to asset classes at various locations on the risk spectrum.
On April 17, 2019, the U.S. Treasury Department released 169 pages of new proposed regulations that amplify and clarify an earlier set of proposed regulations that were released in October 2018 (October Proposed Regulations), which primarily addressed the operative rules of real estate investments within the QOZ program.
There can be significant advantages to owning investment real estate, including reducing taxable income with business expenses, depreciation, and amortization. Unfortunately, what the IRS gives, it also eventually takes back.
In this article, we’ll discuss capital gains tax, how to calculate potential capital gains tax liability, and ways commercial real estate investors can minimize the impact of tax on capital gains.
If you’ve been following our blog, you’re probably familiar with the 1031 exchange process. Just to refresh, a 1031 exchange is when an investor sells a property and reinvests the proceeds into a second property to avoid paying taxes on the profits (also referred to as ‘deferring’ taxes). Specifically, the investor will avoid paying capital gains and depreciation recapture taxes.
At Realized, we are grateful for the opportunity to be stewards of wealth. We are thankful for our generational relationships with the families that entrust us to help them reach their retirement, lifestyle, and investment goals. This trust humbles us as we continue to provide and develop innovative investment property wealth solutions.
Many changes can take place during the 1031 exchange process. Perhaps the deal falls through on the identified property, or the exchanger decides not to move forward with the exchange altogether. Whatever the case may be, the next question an exchanger will inevitably ask is: when can I get my money back?
Capital gains are the result of profit generated from the sale of an asset. Capital gains apply to both equity investments and real estate. When the value of a property rises above its cost basis or adjusted tax basis, the investment experiences a gain. The opposite happens when the value of a property falls below its cost basis or adjusted tax basis. This is called a capital loss.
When choosing to invest in real estate, there are a number of approaches an investor can consider. Two of the most popular investment methods include Real Estate Investment Trusts (REITs) and Delaware Statutory Trusts (DSTs). These two investment options have several benefits, which will be discussed below.