What Is A Like-Kind Exchange?
Also known as a 1031 exchange, a like-kind exchange is an IRS-eligible transaction that allows the owner of investment property to defer capital gains resulting from the hold and sale of the property. A like-kind exchange does not completely dismiss the owner’s requirement to pay the capital gains taxes associated with the appreciation in property value upon disposal; it only defers it.
What Is Asset Allocation, And Why Is It Important?
Asset allocation is an important aspect of building a diversified portfolio. It is a strategy in which an investor divides capital among several asset classes, such as stocks, bonds, derivatives, and alternatives. While asset allocation does not guarantee a profit or protect against loss in a declining market, this strategy seeks to manage risk by diversifying exposure to asset classes at various locations on the risk spectrum.
Key Takeaways From Second Round QOZ Regulations
On April 17, 2019, the U.S. Treasury Department released 169 pages of new proposed regulations that amplify and clarify an earlier set of proposed regulations that were released in October 2018 (October Proposed Regulations), which primarily addressed the operative rules of real estate investments within the QOZ program.
Disasters and 1031 Exchanges (Part 2)
If you’ve been following our blog, you’re probably familiar with the 1031 exchange process. Just to refresh, a 1031 exchange is when an investor sells a property and reinvests the proceeds into a second property to avoid paying taxes on the profits (also referred to as ‘deferring’ taxes). Specifically, the investor will avoid paying capital gains and depreciation recapture taxes.
When Can I Get My Money Back From A Qualified Intermediary?
Many changes can take place during the 1031 exchange process. Perhaps the deal falls through on the identified property, or the exchanger decides not to move forward with the exchange altogether. Whatever the case may be, the next question an exchanger will inevitably ask is: when can I get my money back?
Delaware Statutory Trusts vs. Real Estate Investment Trusts
When choosing to invest in real estate, there are a number of approaches an investor can consider. Two of the most popular investment methods include Real Estate Investment Trusts (REITs) and Delaware Statutory Trusts (DSTs). These two investment options have several potential benefits, which will be discussed below.
What Happens if Your Qualified Intermediary Files Bankruptcy?
When you’re trying to close on the sale of a property the last thing you’re probably thinking about is choosing a qualified intermediary (also referred to as an “accommodator” or “facilitator”) for a 1031 exchange. It’s so easy to go with the 1031 exchange accommodator suggested by your title company, real estate broker, attorney, friend, uncle, etc. After all, if your 1031 funds are held by a reputable qualified intermediary, there’s no need to worry, right?
Qualified Opportunity Zones vs. 1031 Exchanges
The recent Tax Cuts and Jobs Act enacted in December 2017 created yet another vehicle to defer capital gains for real estate investors, this time in the form of opportunity zones. This vehicle, the Qualified Opportunity Zone Fund (QOZF), is similar to 1031 exchanges, which are transactions that also allow investors to defer capital gains on real estate holdings at the time of disposal. However, QOZFs present to accredited investors the opportunity to defer gains realized from investments in stocks, bonds, businesses, and other alternative investment types in addition to gains realized from real estate investments.
What States Don't Conform With QOZ Tax Benefits?
One of the highlights of the 2017 Federal Tax Cuts and Jobs Act (TCJA) is the Qualified Opportunity Zone (QOZ) program that gives taxpayers the ability to defer and potentially eliminate certain capital gains. Effective starting in 2018, the program is available for a limited window of time, and only provides incentives throughout a ten-year tax deferral period. To continue learning about the program, take a look at the timeline below, or read more here.
Tax Benefits Of Opportunity Zones
In December 2017, the Tax Cuts and Jobs Act was passed, offering a brand-new tax incentive for investors called Qualified Opportunity Zones (QOZs). Through the Qualified Opportunity Zones program, the federal government certified distressed, low-income communities throughout the United States as Qualified Opportunity Zones, providing much-needed resources to communities in need while offering tax advantages to those who invest in these neighborhoods.
