What Is Preferred Equity?
Preferred equity has its advantages over other shareholder classes. But along with those advantages are some disadvantages. In this article, we’ll go over what preferred equity is and how it is used in real estate.
Does Medicare Tax Apply To Capital Gains?
Capital gains taxes are something every investor must contend with. But these taxes aren’t limited to just short and long-term gains. There’s another tax called the Medicare tax that can also get thrown in. It doesn’t happen to everyone, though. In this article, we’ll look at who the Medicare tax effects.
Are Triple Net Leases Good Investments?
A triple net lease (NNN) consists of three nets — taxes, insurance, and maintenance. The tenant pays for all three. The landlord is responsible for capital expenditures related to structural issues of the property. The landlord may also have to prep the space for a new tenant.
Evaluating Real Estate Risk
Every investment involves risk with the possibility of gain. Where risk is the potential for financial loss and/or uncertainty in investment decisions or activities, accurately quantifying the level of risk is key to healthy investing.
What Is A Forward 1031 Exchange?
A forward 1031 exchange completes the close on the relinquished property before acquiring the replacement property. This method and a simultaneous 1031 exchange, where both properties are closed at the same time, are the two most common 1031 exchange methods (the third is a reverse 1031 exchange). A forward 1031 exchange is also sometimes called a “Like-Kind Exchange,” “Starker Exchange,” or “Delayed Exchange.” All the 1031 exchange deadlines and rules still apply with a forward 1031 exchange. A qualified intermediary (QI) has the same role in a forward 1031 exchange as in other 1031 exchanges. As with the other 1031 exchanges, a forward 1031 includes the same great tax deferral benefits.
What Is Included In A Triple Net Lease?
A triple net lease, also called a NNN, is a popular commercial real estate lease type. In a NNN, the tenant pays for all expenses except structural and some insurance. Basically, the tenant is paying only for their use of the property. The tenant’s responsibilities include three nets:
Does A 1031 Exchange Free Up Passive Losses?
A passive loss occurs from a capital loss, or selling a property for less than you paid for it. The only time it is possible for an investor to utilize their Passive Activity Losses (PALs) is during a 1031 exchange. A PAL is one of two types of losses that can arise from owning investment property. The other type of loss is a Net Operating Loss (NOL). A NOL occurs when expenses of the operation of a property exceed the income.
Financing Options Tighten For Smaller Multifamily Investments
As expected, lenders have tightened up loan requirements, but unlike the 2008/2009 GFC (Global Financial Crisis), the market hasn't frozen up. During the GFC, liquidity dried up and was slow to return. The Federal Reserve has acted decisively in 2020 to avoid a replay of the 2008 collapse. Some of this liquidity has come by way of a program called the Primary Dealer Credit Facility, which was used during the GFC and again as the stock market dove in March this year.
Using DSTs To Fill In The Gaps Of A 1031 Exchange
In order to defer paying capital gains taxes when selling an investment property by reinvesting the proceeds into another property, the taxpayer must comply with the parameters established by the IRS for a like-kind exchange under Section 1031. The crucial rules include the following:
How To Reduce Tax Exposure On The Sale Of An Investment Property
Real estate owners in the final stages of selling an investment property can face substantial tax liabilities. Upon closing, owners may be straddled with federal capital gains, state income and depreciation recapture taxes. Any potential profits could be considerably eroded -- but there are ways to make the most of your pending exit transaction.
