Real estate investors are often looking for ways to further diversify their portfolios. In the same way that investors who focus on publicly traded stocks don’t solely focus on one type of asset class, real estate investors often like to hold investments in varying types of real estate.
Real estate investment trusts (REITs) have grown in popularity as business entities in part because they are exempt from taxation at the corporate level when they meet certain distribution requirements, which also makes them exempt from double taxation paid by C-corporations.
For many real estate investors, the main goal of completing a 1031 exchange is to swap the equity in one property for an asset of equal or greater value while deferring capital gains taxes generated from the sale of the relinquished property.
Real estate investors not only focus on picking the right properties, but savvy investors may also understand how to use the current Tax Code to their benefit. Policymakers have put certain provisions in the existing Federal Tax Code that incentivize investors into not only making an initial investment, but also benefits associated with maintaining their position as an investor. One such example of an incentive is the 1031 exchange. Understanding how these exchanges work, what they are, and the laws that surround them can ensure that you’re in a position to potentially enjoy sustained success as a real estate investor.
Real estate investment trusts, also known as REITs, are a tool for real estate investors seeking to earn passive income. REITs allow investors to pool their money to own shares in a real estate investment. Ultimately, many REITs can be purchased the same way that stocks are purchased on the New York Stock Exchange. While most REITs are publicly traded, and thus regulated by the SEC, there are also private REITs. Understanding how private REITs work, how they are governed, and the potential benefits associated with investing in them can help you make an educated decision about whether or not private REITs are something to consider adding to your investment portfolio.
You may be interested in investing in real estate but aren’t sure where to start. You may not have the budget to invest in larger properties, but know they can provide income opportunities.
In a 1031 exchange capital gains taxes are deferred when a taxpayer sells a qualified real estate investment and uses the funds to buy a like-kind property. The property being sold is the relinquished property and the new investment is known as the replacement property.
Understanding how escrow works can be important in real estate investing. Escrow accounts protect you during a real estate transaction and ensure that both parties meet all requirements before money is exchanged.
Tax loss harvesting is a type of portfolio rebalancing for tax efficiency purposes. Most people don’t perform tax loss harvesting manually. Instead, their broker does it automatically. While the process is automated, there are still some areas to look out for, such as the wash sale. Let’s go over how it all works.
A transaction involving Section 351 of the Internal Revenue Code is a straightforward means for an individual to transfer property to a corporation in exchange for stock without recognizing a gain or loss. The transfer of property must be made in exchange for stock in the corporation. Immediately after the transfer, the transferor or transferors must then control the corporation that received the property. Control is defined as possessing at least eighty percent of voting rights and eighty percent of any non-voting stock.
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