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1031 Exchange Basis: What it Is, How it Works

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A 1031 exchange lets you exchange your investment real estate (relinquished property) for another of equal or greater value (replacement property). The main benefit of the exchange is that you could defer payment on capital gains taxes and depreciation recapture.

Absolute Net Lease: What It Is and How It Works

Acquiring and renting out an investment property means entering lease agreements with tenants. Those agreements range from gross leases (in which the tenant pays a fixed rent, and you pay all property operating costs) to a triple net lease (in which the tenant pays the fixed rent, plus insurance, taxes, and maintenance).

Steps to Set Up a Living Trust

If you own investment property, estate planning can be an important tool to manage your assets and ensure they reach your designated beneficiaries. One way to accomplish this is with a living trust.

Tax Implications of a Delaware Statutory Trust

Investment in a Delaware Statutory Trust (DST) could offer a few benefits:

Realized vs. Unrealized Gains: Differences and Tax Implications

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Realized and unrealized gains represent profits from the sale of assets. However, that’s the only similarity between the two terms.

Important information to Know About Depreciation and Real Estate Sales

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Real estate assets undergo wear and tear and other factors that can impact their useful life. This opens the door to depreciation, which can help reduce your tax liability while you own investment or business property.

How To Convert a Like-Kind Acquired Rental Property Into a Primary Residence

There may come a time when you want to turn an investment rental property acquired through a 1031 exchange into a primary residence. While the process is usually not complicated, converting real estate assets acquired through a like-kind exchange could pose several challenges. The IRS has strict rules regarding the use of such assets. Failure to comply could result in the loss of your tax-deferred status.

An Explanation of UPREITS and Dividend Payments

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If you’re an investor interested in moving from direct to passive real estate ownership, contributing your property to a real estate investment trust (REIT) using the Section 721 exchange could be a viable tax-advantage strategy to help defer capital gains taxes.

Qualifications for Reducing Capital Gains Tax

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Capital gains taxes are an expense that can increase the cost of selling real estate assets. If you sell your assets for a profit, you’ll owe a certain amount–0%, 15%, or 20% of the proceeds--to the IRS. Additionally, depreciation recapture (taxed up to 25%) and the 3.8% Net Investment Income Tax (NIIT) may apply, depending on income level and prior deductions.

The Opportunities and Challenges of 1031 Exchange Oil & Gas Properties

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Section 1031 of the Internal Revenue Code (IRC) is typically used for real estate held for business or investment purposes. However, the like-kind exchange can also be useful for oil and gas properties in certain situations.