David’s Recent Posts
How Are Capital Gains Taxed?
Calculating exactly how your capital gains are taxed is not always so simple. There are many complicated rules and stipulations to keep in mind, and it can get confusing very quickly. We've broken down the taxation of your capital here.
You Can Do a 1031 Exchange on a Primary Residence—Here's How
One of the frequent questions we get is: “can I use my primary residence in a 1031 tax-deferred exchange?” Unfortunately, the IRS' short answer is a definite no. Your home is your home, and a 1031 exchange is used to defer the capital gains taxes due on an investment property. However, as is usually the case under the Internal Revenue Code, exceptions exist.
The Other DST – Deferred Sales Trust
Purchasing fractional shares of Delaware Statutory Trusts (DSTs) and completing 1031 exchanges are common strategies for real estate investors seeking to defer capital gains taxes when they sell investment properties – but they aren’t the only options.
What Is the 65-Day Rule?
While income tax rates and rules for individual and married taxpayers are complicated enough, the application of rates and thresholds to trusts adds a layer of complexity to financial planning. The 65-day rule relates to distributions from complex trusts to beneficiaries made after the end of a calendar year. For the first 65 days of the following year, a distribution is considered to have been made in the previous year.
How to Record Payments to Qualified Intermediaries Via Form 1042-S
Form 1042-S is sent to non-U.S. residents who have income in the U.S. Income is from U.S.-based entities. This income includes distributions from real estate properties or funds. A Form 1042-S must be filed for each type of income reported.
Part 3: Using Tax Planning In an Effort to Increase Returns – Real Estate Exchanges
At Realized, we believe that tax planning in real estate is about seeking opportunities that can help ensure that the amount of money you make remains money you keep. In our final post in this series, we’ll cover an additional tactic to consider when seeking ways to increase your after-tax cash flow: leverage tax-deferred real estate exchanges.
Part 2: Using Tax Planning In an Effort to Increase Returns – Increase Your Cost Basis
At Realized, we believe that tax planning in real estate is about seeking opportunities that can help ensure that the amount of money you make remains money you keep. In our second post in this series, we’ll cover an additional tactic to consider when seeking ways to increase your after tax-cash flow: increasing your cost basis.
Part 1: Using Tax Planning in an Effort to Increase Returns – Leverage Depreciation
At Realized, we believe that tax planning in real estate is about seeking opportunities that can help ensure the amount of money you make remains money you keep. And knowing your actual, taxable cash flow is one opportunity. In this three-part series, we’ll examine different ways to use tax planning that are designed to help keep potential profits in your pocket.
Form 8824 - Section III Explanation
Form 8824 is the part of an investor’s tax return that contains 1031 exchange transaction information. Section III of the form determines the net results of the transaction (gain or loss). This section is the 1031 exchange transaction and how the IRS receives information about the transaction’s gain or loss for tax reasons.
What is a Partial 1031 Exchange?
Often, 1031 investors would like to set aside a portion of the money from their property sale. Perhaps they have college tuition or an upcoming wedding to consider. This begs the question: Is it possible to keep a portion of a property sale’s proceeds while still deferring the majority of taxes with a 1031 exchange?
