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.

How Do I File a 1033 Election?

Each year we bear witness to yet another out-of-control wildfire that devastates an entire California community, or another destructive hurricane wracking the Eastern Seaboard or the Gulf of Mexico.

Can Additional Census Tracts Be Nominated as Opportunity Zones?

No one will likely soon forget the many painful financial lessons learned during the Great Recession, especially real estate investors who saw their property values plummet by more than half when the U.S. housing bubble burst in 2008.

Strategies for Deferring and Reducing Capital Gains [Webinar Recap]

Enacted in 1921, IRC 1031 allows investors to defer all federal and state capital gains and depreciation recapture taxes when selling property by reinvesting, or “exchanging” their equity into a “like-kind” replacement property. Investors can use this strategy in hopes of building wealth on a tax-deferred basis by reinvesting 100% of that equity.

How Soon Can I Refinance a 1031 Exchange Property?

Refinancing an investment property is the process of paying off an existing loan and replacing it with a new one that has different terms. Investors may seek to refinance a loan’s terms for one or more of several reasons:

What Happens to Depreciation When You Sell a Rental Property?

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.

Can a Qualified Opportunity Fund Invest in a REIT?

Qualified Opportunity Funds (QOFs) are the vehicles that investors can use to participate in the Opportunity Zone program, which was created by the 2017 Tax Cuts and Jobs Act (TCJA). Opportunity Zones are federally designated areas in need of economic growth and investment. In exchange for directing investments in the targeted regions, taxpayers can defer and reduce their taxes on invested funds under certain circumstances. Here is how the program works:

Can an Installment Sale Be Used in a 1031 Exchange?

Completing a 1031 exchange can be an excellent method of making changes in your real estate portfolio while deferring capital gains and other tax obligations. However, the effort requires advanced planning and discipline to succeed. Investors should begin considering potential replacement assets before selling the property targeted for relinquishing in most cases, particularly when competition for real estate is challenging, as it is today.

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