Does A Ground Lease Qualify For A 1031 Exchange?
There are ways to structure your ground lease exchange so that it satisfies IRC Section 1031. A ground lease is a type of decades long, long-term commercial lease where the tenant owns the structure but not the land it sits on. The landlord owns a fee simple interest in the ground, not the structure. Tenants have the right to develop and use the property throughout the duration of the lease but pays rent for the land to the landlord.
1031 Exchange Agreement: What You Need to Know
For a transaction to satisfy the requirements of IRC Section 1031, the taxpayer must meet several provisions of the code. While the IRS does not require that the sale and purchase agreements contain language that establishes the owners' intent to complete an exchange, many participants include clarifying verbiage anyway. Often the purpose for the seller to insert this language in the agreement is twofold:
Should I Consider A DST With Or Without Debt?
We’ve published several articles about Delaware Statutory Trusts (DSTs), including the advantages and disadvantages. DSTs let investors enjoy the potential benefits of real estate - rental income, appreciation, tax benefits - without having to have operational control or management of the property. We’re going to take another look at the pros and cons but in relation to debt-free versus leveraged DSTs.
How Do You Calculate The Rate Of Return On Your Real Estate Investment Before It's Sold?
There are many ways to calculate the return on a real estate investment. Two main categories make up the calculations: holding period return (i.e., buy to sell) and performance metrics (i.e., ongoing basis - property not yet sold). For this article, we’ll go over how to calculate the holding period return using an all-cash transaction and then another with debt financing.
How Many Times Can You Do A 1031 Exchange?
While timing is important in the 1031 exchange process, the taxpayer’s intent is everything. According to Section 1031 of the U.S. Internal Revenue Code, a 1031 tax-deferred exchange has a sequence of actions that must be completed within a strict time frame to qualify. Outside of the 45-day identification period and the 180-day exchange period of a property, which run concurrently and start counting when the sale of your property closes, there is no law regarding the minimum or maximum time of ownership, the number of times you can do a 1031 exchange, or the frequency.
How To Report a 1031 Exchange on Your Tax Return
You’ve successfully completed a 1031 like-kind exchange and deferred your capital gains tax on the sale of your former investment property - congratulations! The IRS still wants a report of every single exchange where you may have deferred your tax liability.
Can I Move My IRA Into An Opportunity Fund?
The Employee Retirement Income Security Act of 1974 (ERISA) introduced the individual retirement account. And, the IRA became popular with help from the Economic Recovery Tax Act of 1981. These days, IRAs are positioned to help individuals save for retirement, with tax-deferral advantages.
Active vs. Passive Investing - The Key Differences To Know
There are two different ways to generate income — active and passive. One is a time for dollars trade-off while the other is able to generate income without your direct involvement. There are many differences between these two types of income, and choosing one over the other doesn’t mean one is better than the other. Sometimes the choice is a personal preference, and sometimes it's out of necessity. In this article, we’ll go through the differences between these two types of income.
Will The 2020 Pandemic Impact Construction?
In the U.S., 2020 has brought a broad-based decline in commercial real estate due to COVID-19. Any business deemed non-essential has taken the brunt of the slide. Office leasing, retail, and other non-essential companies have seen their revenues dry up — and the astronomical drop in travel has led to the decline in hotels and other hospitality properties. But one area that hasn't completely stopped all activity is construction starts.
Qualified Opportunity Funds vs. Qualified Opportunity Zone Businesses
While Qualified Opportunity Funds (QOFs) and Qualified Opportunity Zone Businesses (QOZBs) are an essential part of the Opportunity Zone program, their purposes are quite different. QOFs are in place to fund projects in federally designated QOFs, while QOZBs are directly engaged in trade and activity within these locales.
