What Is Debt Replacement in a 1031 Exchange, and How Does It Work?
A 1031 exchange is a transaction that enables investors to use the proceeds from one investment property to fund the purchase of similar (like-kind) replacement property while deferring the payment of capital gains taxes and depreciation recapture. The name 1031 exchange refers to the IRS code section that established the practice, which was initially intended as an actual land exchange but today is used for investment property.
What Are New Market Tax Credits (NMTC) and How Do They Work?
New Market Tax Credits (NMTCs) are part of a program to attract private investment to low-income communities across the United States. If that sounds familiar, you might be thinking of opportunity zones (OZs). NMTCs and OZs do have overlapping areas, but there are some differences. NMTCs were created in 2000, while OZs were created in 2018 as part of the Tax Cuts and Jobs Act.
What Are Keystone Opportunity Zones?
Since its inclusion as part of the 2017 Tax Cuts and Jobs Act, the Opportunity Zone Program has been discussed and debated for both its benefits and shortcomings. Introduced as a way to funnel private monies into federally designated Qualified Opportunity Zones (QOZs), the program’s goal is to boost economic and business development in lower-income areas. In return, investors receive tax advantages for placing their capital gains into Qualified Opportunity Funds (QOFs).
Is Tenancy in Common a Type of Mortgage Loan?
A tenancy in common arrangement provides a way for investors to dip their toes into property ownership without the financial burden of being a solo investor. While a tenancy in common isn’t exactly a type of mortgage loan, we’ll explain financing options for this type of ownership structure.
Ways to Manage Taxes on Investment Property
Many people and businesses acquire rental properties and commercial real estate for their earnings potential, and as part of an ongoing portfolio strategy. However, as is the case with many ventures, there can be downsides to buying real estate as an investment. One such downside is taxes.
Is Rental Property Depreciation the Same Every Year?
When you invest in rental property, you are likely seeking to earn income from renting out the property to tenants. Many of the expenses associated with the property, like property taxes, repairs, maintenance, and professional management, are deductible from the income you earn in the same year that you spend the money. Depreciation of the actual cost of obtaining the property is different because the asset has a long useful life, unlike the transitory nature of services that you can deduct on a current basis.
Can Banks Use Opportunity Zones?
Mention the term “opportunity zone,” and what might come to mind are “capital gains,” “investors,” and “tax deferral.” Basically, entities can invest capital gains from the sale of assets into Qualified Opportunity Funds (QOFs) to defer any taxes on those profits.
Qualified Intermediary Withholding: Everything You Need to Know About QI Agreements, Statements & Foreign Partnerships
Mention the words “Qualified Intermediary” and the next thing that might come to mind is “1031 exchange.” Certainly, QIs are essential when it comes to the successful execution of a real estate like-kind exchange. In this case, the entity, also known as the accommodator, acts to change a sale to a buyer and a purchase from a seller into an exchange of the one for the other. In addition, the QI prevents the taxpayer from being considered in actual or constructive receipt of the proceeds during the interim period between the sale and purchase.
What Government Agency Oversees 1031 Property Exchanges?
A 1031 Exchange is a way for investors to defer the capital gains taxes on investment real estate. The process gets its name from the relevant section of the Internal Revenue Code, which allows an investor to defer the gain when investment property is sold if they reinvest the proceeds into another investment property of the same or greater value.
Which Characteristics Make a Security Most Subject to Liquidity Risk?
All investors face some level of potential liquidity risk. Some securities are more prone to liquidity risk than others. In an effort to manage liquidity risk, there are particular characteristics that you can look out for. Let’s walk through them.
