The Realized Team’s Picks
Do I Need A Lawyer For A 1031 Exchange?
The 1031 exchange process can be complicated, especially for novice or first-time real estate investors. Completing a successful exchange requires strict adherence to deadlines and other IRS exchange provisions.
Why Would a Commercial Landlord Insist on a Triple Net Lease?
A triple net lease (NNN) benefits commercial landlords by reducing the potential risk that comes with a commercial lease. The triple net lease is a lease agreement between a tenant and landlord where the tenant agrees to pay all of the expenses of the property. These expenses include property taxes, property insurance, and maintenance, in addition to rent and utilities.
Government Accountability Office Weighs in on Qualified Opportunity Zones
Oversight and reporting concerns have been part of the Opportunity Zones program since it came into effect as part of the Tax Cuts and Jobs Act of 2017. The Brookings Institution’s 2018 report, “Learning from Opportunity Zones: How to Improve Place-Based Policies” decried the lack of “necessary data and defining criteria” when it came to targeting distressed communities under the program. In late 2019, Sen. Ron Wyden (D-OR) sponsored S.2787, the “Opportunity Zone Reporting and Reform Act.” The legislation focuses on Qualified Opportunity Fund (QOF) requirements, as well as modifications to the Qualified Opportunity Zones (QOZs). The bill was referred to the Senate finance committee, where it remains.
What is a 401(a) Retirement Plan?
While most people are familiar with the 401(k) retirement plan provisions, many are not as aware of the nearby section of the Internal Revenue Code in 401(a). While the (k) retirement plans are typically sponsored by private companies, a 401(a) is generally established by a non-profit organization, a non-federal government agency, or an academic institution. Sometimes these organizations will set up a 403(b) plan instead of a 401(a). In either case, the sponsoring organization can determine the eligibility requirements and compel participation, but there are differences.
Important Factors To Know When Investing In Commercial Real Estate
Investing in commercial real estate can be profitable but many factors come into play. Commercial real estate is property that can generate income and capital appreciation for the owner and includes any non-residential real estate. Examples of commercial real estate include retail space, office buildings, industrial buildings, and multi-family properties, among others.
1031 Exchange Into Delaware Statutory Trust: What Terms Should I Know?
A Delaware Statutory Trust (DST) is one of the most common investment methods when considering a 1031 exchange. Although Delaware is in the name, you can complete a DST investment anywhere in the United States. Neither the investor nor the property needs to be in Delaware. A DST is a pre-packaged investment on a property put together by a sponsor. After the sponsor does due diligence, negotiates lease terms, and takes other steps to put the package together, then they offer equity to investors. The trustees pool their 1031 exchange funds for the investment and then receive cash distributions if the property is profitable.
Risk and Rewards: All-Cash Versus Financing
Consider the following scenario. You meet a friend for lunch, and he is very excited about a real estate purchase on which he just closed. He is now the proud owner of a fully tenanted apartment building, located in a great part of town. Then he delivers the piece de resistance. “I paid all cash for it!” he announces. “This investment is practically risk-free!”
Can Tenants In Common Force a Sale?
Tenant in common is a frequently used joint ownership agreement for commercial and residential real estate. Commercial real estate investors often purchase individual interests in TIC properties to complete 1031 exchanges and defer capital gains taxes on the sale of investment properties.
What is a Section 1231 Gain?
Selling a business or investment property is a big decision with many financial ramifications. Sure you’re likely to gain some profit, but you’re also likely to be hit with a significant tax liability on any gains realized from your assets.
Capital Gains Tax On Primary Residence: How Much Is It And Can It Be Avoided?
A primary residence is not an investment property and thus has different tax outcomes. Primary residence homeowners can take advantage of certain tax benefits when selling their home. This benefit is called section 121 primary residence tax exclusion.
