The Realized Team’s Picks
Who Pays Net Income Investment Tax (NIIT)?
In a previous article, we discussed the concept of net investment income tax (NIIT). We outlined the fact that the 3.8% NIIT under the auspices of 26 U.S. Code § 1411 - “Imposition of Tax,” and is applied to net investment income (NII).
Can You Do a 1031 Exchange on Cryptocurrency?
The Internal Revenue Code has traditionally permitted investors to exchange real property used for business or held for investment purposes for other business or investment property of the same type and has referred to these swaps as “like-kind exchanges.” Thus, making such an exchange would not expose the taxpayer to taxes on any gain unless they received the increase as non-like property or in money.
Can Opportunity Zones Be Used for Equipment?
The Tax Cuts and Jobs Act of 2017 brought about many different kinds of tax reform, particularly for corporations and private investors.
What Is a Delayed Section 1031 Tax Exchange?
If you’ve been reading our blogs on a regular basis, you know all about the 1031 exchange. Sometimes called the “like-kind” exchange, Section 1031 of the Internal Revenue Code allows you to “exchange” a current property used for investment or business purposes (the “relinquished” property) into another property (the “replacement” property). Doing so means you can defer capital gains on the disposal of your relinquished property.
What Are Three Methods of Depreciation?
We’re going to review the three most popular depreciation methods. Selecting an efficient depreciation method can result in taxation that better aligns with a company’s ability to generate revenue. Of course, you’ll want to speak with your tax adviser before deciding on any of these methods.
Can You Take Cash Out of a 1031 Exchange?
The 1031 exchange isn’t all or nothing, meaning that 100% of the sales proceeds must be used in the exchange. However, it may come at a price. Boot in a 1031 exchange refers to the fair market value of cash, benefit, or other non “like-kind” property received by the taxpayer in an exchange of a capital asset, which is subject to capital gains tax.
What Is Leverage Risk?
Leverage allows investors to increase their exposure to a market, whether real estate, stocks, or commodities. If managed well, leverage can work in an investor’s favor. But some investors take on too much leverage. When the market goes against them, it amplifies the negative impact. In some extreme cases, an investor can be wiped out just from using too much leverage. Let’s see how leverage works and the risk it presents.
How Much Does a Reverse 1031 Exchange Cost?
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.
Can You Invest in Land in Opportunity Zones?
Investments in Opportunity Zones (often referred to as QOZ investments or Qualified Opportunity Funds) may offer potential for taxpayers to defer paying taxes on capital gains they have earned, while also seeking to earn more by reinvesting those gains. As a potential additional incentive to consider QOF investments, the program is intended to enhance economic development in lower-income areas.
Can a New Property Be Purchased Before the Old Property Is Sold in a 1031 Exchange?
In a 1031 Exchange, a taxpayer defers capital gains taxes on the sale of real estate by exchanging the proceeds from the sale into a “like-kind” property of equal or greater value. The transaction derives its name from Section 1031 of the Internal Revenue Code. In addition to the tax on your capital gain, you may need to pay a state capital gains tax, depreciation recapture, and NIIT (Net Income Investment Tax) when you sell investment property for a price that is greater than your basis in the property. Instead of just selling, by completing a 1031 exchange, you can potentially defer each of these obligations.
