Prior to 1991, in a 1031 tax-deferred exchange, a seller would deed a property to an intermediary who then deeded the property to a third-party buyer, known as sequential deeding. Now, there is the option for the seller to deed to property directly to the buyer, known as direct deeding.
Real Estate Investment Trusts, or REITs, can offer investors many of the potential benefits associated with real estate investments without the common pitfalls of direct property ownership.
The 1031 exchange is a tool that investors seek to use to help manage capital gains tax liability by reinvesting the proceeds from the sale of investment property into like-kind assets. The name "1031 exchange" comes from the relevant section of the Internal Revenue Code. Originally it referred to an exchange of actual farmland, but today it applies to taxpayers who hold real property for investment.
Capital gains are one of the most important financial considerations to make when selling your property. Over the years, there have been plenty of exemptions that prevented consumers from having to pay capital gains taxes on certain sales. One of these was a home sale exemption for people over the age of 55. However, this exemption has not been in place since 2007.
Topic: Capital Gains
If you’ve browsed any real estate site for properties, you have likely encountered the term “single-family home” numerous times. This is what the average person has in mind when they think of a home. A single-family home can serve a variety of functions that include living, renting, selling, and more. In this post, we will focus on defining what a single-family home is and the pros and cons of renting one.
Buying an investment property is a way to diversify your wealth and seek a passive income. Many real estate investors own their primary residence and invest on the side to increase their asset portfolio. However, some investors live in a rental unit while simultaneously investing in rental properties.
Most people familiar with the 1031 Exchange process know the standard forward process that includes selling a property and then acquiring a replacement property. Of course, this isn’t the only way to do things. One option, a tax deferment strategy in part, is a Reverse 1031 Exchange that allows an investor to acquire the new property before getting rid of the old property. Of course, the biggest part of being successful here is in understanding the process.
For real estate investors, annual depreciation expense is one of the main draws for real estate investing. It’s sometimes called a phantom expense because investors pay no out-of-pocket expense. But the expense’s effect is real — potentially lowering an investor’s tax bill.
Defining a Will:
A will, also known as the last testament, is a legal document that enforces how a person’s assets will be allocated after their death. A will serves more functions than just distributing the assets of a deceased person. In fact, a will is a crucial component of estate planning.
Qualified Opportunity Zones (QOZs) were established in the Tax Cuts and Jobs Act of 2017. The actual zones were determined in 2018. Opportunity zones cannot be amended at this time. The tracts were developed to give potential tax incentives to new investors in low-income and distressed areas and promote long-term investments and economic growth.
Topic: Qualified Opportunity Zones