[Webinar Recap] How To Treat Your DSTs During Tax Season - Managing Income Tax and Cash Flow
Here at Realized, we help our clients use 1031 Exchanges to buy and sell real estate. 1031 Exchanges help investors legally defer capital gains taxes on real estate sales by exchanging one property for another like-kind property. In addition to direct real estate, one form of like-kind property investors can exchange into is a Delaware Statutory Trust, or DST. DSTs can be a tool for growing your real estate portfolio, but they can also be tricky to manage when tax season comes around.
What Happens to Depreciation Recapture in an Opportunity Zone?
There’s been a great deal of discussion about the Opportunity Zone Program since its introduction as part of the Tax Cuts and Jobs Act of 2017. The program’s focus is on investors with capital gains resulting from the sale of capital assets. Specifically, investors funnel those gains into Qualified Opportunity Funds. The QOFs, in turn, use that money to benefit federally designated, generally low-income Qualified Opportunity Zones.
Can You Use a 1031 Exchange to Pay Off Debt?
To take full advantage of 1031 exchange tax deferral benefits, investors must follow a number of rules. Some of these rules outline the use of proceeds for paying off debt. Investors can’t use proceeds to pay off debts such as credit cards, car loans, or other personal loans. However, some debts can be paid off as long as 1031 exchange debt restrictions are followed.
Can REITs Invest in Opportunity Zones?
Investors like REITs (Real Estate Investment Trusts) mostly for their dividends. After all, REITs must distribute 90% of their income through dividends. But if you've read about opportunity zones and are interested in investing in them, can you do it through REITs?
What Happens If You Don't File Form 8824?
The 26 U.S. Code § 1031—”Exchange of Real Property Held for Productive Use or Investment”—can help defer any potential taxes levied on gains resulting from the sale of investment real estate. Swapping your relinquished property for a replacement property of equal or greater value can push your tax burden down the road at least, as long as you follow the IRS’ many rules regarding the like-kind exchange.
Are Distributions from a Qualified Opportunity Fund Taxable?
While qualified opportunity funds (QOFs) offer a number of tax benefits, investors understandably have reason to be concerned about the tax implications of distributions from these funds. In this article, we’ll take a closer look at whether distributions from a QOF are taxable and how specifically they are taxed.
How to Report a Section 121 Exclusion
Section 121 of the Internal Revenue Code allows taxpayers to exclude from income some of the gains they have enjoyed due to the increase in value of a primary residence. The IRS rules are meant to support the exclusion by homeowners while denying it in the case of an investment property. To that end, taxpayers claiming the exclusion must satisfy both an ownership and use test.
Do I Have to File a 1099-R Form?
You will likely get a 1099-R form If you received a distribution from a retirement plan or a similar account like an annuity, pension, or insurance contract. The plan administrator is responsible for filing the 1099-R with the IRS and any required state or local governments. As the taxpayer you will also report the distribution on your income taxes.
What is an Inter-Vivos Trust?
An inter-vivos trust is a type of trust created during the life of the grantor, or the person who establishes the trust, as opposed to a trust created through a will after the grantor’s death.
What Does it Mean When a Property Is Under Contract?
When a property is listed for sale, potential buyers make an offer with their best price and any contingencies. If the seller accepts the offer, the property is considered “under contract.” The buyer and seller are now in a legally binding agreement.
