The Realized Team’s Picks
How is a Taxable Gain on an Installment Sale Taxed?
Installment sales have favorable tax treatment, making them attractive for certain sellers. Rather than receiving proceeds from the sale of an investment property at once, the seller receives payments over time. For those who value tax benefits over the immediate need for cash, an installment sale can work in their favor.
Does a Tenancy in Common Need to Be Filed in Court?
Many legal structures exist when it comes to real estate ownership. There’s sole ownership, joint tenancy, partnerships, and corporations, just to name a few. Then there is tenancy-in-common, sometimes known as tenants-in-common.
Does a 1031 Exchange Need to Be in the Same Name?
When we discuss the specific provisions governing the execution of a 1031 exchange, sometimes we neglect to mention that the reason the IRS allows this transaction is in recognition of the ongoing nature of the investment. This fact is worth considering since the IRS created some rules to test that status. For example, the deadlines for identifying the replacement property and consummating the acquisition can demonstrate that the taxpayer is traveling down a path rather than completing one investment and engaging in another. Similarly, the limitation on eligibility to “like-kind” investments is a testament to the ongoing endeavor. The IRS further upholds this condition by requiring the taxpayer's identity to remain the same.
What are the Benefits of an Installment Sale to the Seller?
Selling real estate at an appreciated value can generate a good-news, not-so-good-news scenario. The good news is that selling real estate at a higher amount than what you bought it for can mean profit. The not-so-good-news is that this profit – or capital gains – will be taxed, based on your specific tax bracket.
What is a Starker Exchange?
Like most tax topics, the 1031 exchange has a history of changes, primarily due to various legislative and judicial actions. The essential foundation of this tax-deferral strategy is that when investors reinvest the proceeds from selling an asset, they extend the original investment rather than taking their profit and transforming it into spendable cash. As a result, the IRS allowed investors to trade one property for another without paying the applicable capital gains tax.
What is the Federation of Exchange Accommodators (FEA)?
For real estate investors planning to use a 1031 exchange to defer capital gains and depreciation recapture taxes, it’s vital to follow the rules closely to avoid disqualification of the transaction. The 1031 exchange is a potentially valuable deferral tool, so the IRS expects full and transparent compliance with the regulations. Prominent among the requirements are the following:
What are the Different Kinds of Rental Property Loans?
Your path as a real estate investor may take various routes, depending on your resources and goals. Many people begin when they decide to change their primary residence. Instead of selling their current home when they acquire another, they may repurpose the initial residence into a rental property. Similarly, when your equity in a home increases, you may use that appreciation as a down payment on an investment property. Whether starting from scratch or with a saved down payment, you will probably need financing at some point.
What is the Main Purpose of Tenancy By the Entirety (TBE)?
Married couples and domestic partners have a choice among methods of structuring property agreements, depending on the state where they reside and their individual preferences. In most states, married couples can choose between joint tenancy or tenancy-in-common (TIC). This choice often extends to domestic partners as well. In nine states, married couples automatically own property as community property, and in about half of the states, Tenancy by Entirety (TBE) is also an available option. However, no community property states allow a TBE structure.
What is an Opportunity Zone Loan and How Do I Get One?
Congress created the Qualified Opportunity Zone (QOZ) program when it passed the 2017 Tax Cuts and Jobs Act (TCJA). The TCJA had several miscellaneous provisions, but the primary focus of Subchapter Z was the creation of the QOZ program. This new investment opportunity offers investors tax advantages for investing capital gains into economically challenged areas.
How Do I Report An Opportunity Zone on My Taxes?
Tax season is in full swing. This generally means investors have various questions about what needs to be reported—and how—to the IRS.
