How DSTs Help With Your Life Stage Transition
In a familiar scenario, the family business is grown and nurtured by several generations, thriving under the dedication of constant attention. If the circumstances change and that level of direct management is no longer possible, the business could falter and may fail quickly. If property assets are part of the business, one solution may be to consider changing from direct management properties to investments that do not require active involvement. For example, if the primary investor is retiring or otherwise becomes unable to continue overseeing the rental or retail property, it may be time to transition to a passive investment, such as a DST.
Are Dividends Taxed As Capital Gains?
Since the IRS will tax a qualified dividend as a capital gain, while an ordinary dividend is subject to the same tax rate as other regular income, understanding the difference is essential. To be considered a qualified dividend and be eligible for the lower tax rate, a payment must meet the requirements established by the IRS. Because regular income rates top out at 37% and the capital gains percentage reaches a maximum of 20%, the savings may be notable. (Note that there is an additional 3.8% Net Income Investment Tax, which may apply to taxpayers with very high incomes.) The good news for taxpayers is that many dividends meet the qualifications for the lower rate.
Using A DST As A Back-up Plan For Your 1031 Exchange
If you are selling an investment property and seeking a replacement to meet the 1031 exchange parameters for tax purposes, you know that you have some tight deadlines and stringent requirements to meet. Once you sell the property, you have 45 days to identify the replacement property (or properties) and then 135 more to complete the deal. This strict time limit adds pressure to your search for appropriate and desirable properties.
The Impact Of Market Volatility On Multi-Family Lending
As business guru Stephen Covey liked to say, “If there’s one thing that’s certain in business, it’s uncertainty.” That has never been proved more accurate than this year, with its ups and downs, fluctuations, and detours in the investment outlook for commercial lending in all sectors, including multi-family housing. The appeal of multi-family investments is uncertain, due to a lack of clarity in the near-term forecast for rent collection and revenue projections. On the other hand, CBRE reports a reduction in tenant turnover due to lockdowns and economic fears.
Fill The Debt Financing Gap With A Delaware Statutory Trust
Matching the debt from the relinquished property is a vital requirement of the IRS during a 1031 exchange. Failure to do so will result in paying taxes — the worst-case scenario for a 1031 exchanger. But when the markets become unstable or a recession sets in, securing a loan for the replacement property in the exchange may become difficult or even impossible. A paper published by the Harvard Journal of Financial Economics notes that during the peak of the Global Financial Crisis (Q4 of 2008), new loans to large borrowers fell by 47% compared to the previous quarter and by 79% relative to the peak of the second quarter of 2007, identified as the peak of the credit boom.
Student Housing Investments Get Mixed Grades
As colleges and universities across the U.S. open this fall, leaders of those institutions have had to make difficult decisions about operating their schools and teaching their students. Trying to balance the needs of students, parents, faculty, staff, and the community has been fraught for all of the more than 3000 secondary schools. Some have opened with in-person classes and students living on campus, only to reverse course after the eruption of Covid-19 outbreaks. According to The Chronicle of Higher Education:
Coronavirus And Retail: Boom Or Gloom?
Just as the Covid-19 virus hits some people hard and seems to give others a pass, some retailers have been bruised by the economic repercussions of the extraordinary financial and social challenges of 2020, while some have been unscathed. Target, Lowe’s, and Walmart have even benefitted from the crisis, while chains like TJ Maxx and Kohl's have suffered steep declines in sales.
Can Tax Losses Offset Capital Gains?
Not every investment will be as successful as hoped for, but there are strategies that investors can use to turn these losses into tax benefits. Losses on investment can be used to offset capital gains and reduce your taxes. Even if you don’t have gains for that year, losses can still be used to offset future gains or income. A strategy that many investors use to offset capital gains now or in the future is called tax loss harvesting.
What Is The 1031 Exchange Form 8824, And How Do I Fill It Out?
IRS Form 8824 is used to report a 1031 exchange for the tax year in which you complete it. Execution of the form calculates the amount of gain deferred due to a like-kind exchange of property. The IRS considers the deal completed in the tax year that you sell the initial relinquished property, and the exchange period begins. If the replacement process is not fully consummated until the following tax year, then the Form 8824 will not be final until that process is complete, which may require leeway in tax reporting deadlines. If you do not finalize the replacement purchase or purchases until the next tax year, you will need to request an extension for tax filing due to that circumstance.
Understanding The Qualified Opportunity Zone Deadline Extension
If you’ve learned anything at all about the Qualified Opportunity Zone (QOZ) program from previous blogs, it’s that the initiative contains many deadlines. These requirements must be met, to ensure tax deferrals on capital gains from the sale of assets. One such deadline is the 180-day requirement for reinvestment of your capital gains into a Qualified Opportunity Fund (QOF), to postpone taxes. The fund then takes that gain, and gains from other investors, and puts them toward Qualified Opportunity Zone Properties (QOZPs).
