What is Ordinary Income?
Paying taxes on monies received can be confusing. This is because there are various ways in which you might receive funds.
What is Pro Forma in Real Estate?
The Oxford Language Dictionary definition of pro forma is "done or produced as a matter of form" or "a standard document or financial statement.” Similarly, the original Latin meaning is “for the sake of the form.” In contemporary usage, a Pro Forma is a cash flow projection for real estate investments. Pro Formas are typically forward-looking estimates of financial results. Real estate investors rely on the pro forma to analyze potential income and expenses.
Are Stock Dividends Taxed as Ordinary Income?
For many taxpayers, there is a substantial difference in the tax rate they pay for long-term capital gains versus the rate they pay for ordinary income. The tax rates on ordinary income range from 10 percent to 37 percent. In comparison, the rate applied to long-term capital gains income is between 0 and 20 percent. The income taxed at the “ordinary” rate includes salary and wage income, commission, bonuses, rents, royalties, short-term capital gains, interest, and unqualified dividends.
What is a Financial Power of Attorney?
Power of attorney is a legal instrument that allows another person to act on behalf of the individual who granted the power to them. While each state has specific rules governing the designation, in most cases, you can confer it on your selected agent by completing a legal, notarized form. While the documents must be notarized, usually, an attorney is not a necessary part of the process.
Can a Relative Be a 1031 Qualified Intermediary?
The successful execution of a 1031 exchange can allow an investor to defer payment of capital gains taxes. This tactic can help you leverage your investment capital, but to obtain approval from the IRS, you must carefully follow the rules governing the 1031 exchange transaction. If you make a mistake, the IRS may disqualify the exchange, resulting in you having to pay the capital gains taxes immediately.
How Does Depreciation Work When You Sell a Rental Property?
There are many costs involved when selling a rental property. One of those is related to depreciation. Where depreciation giveth, it also taketh away. The IRS will claw back some of the depreciation expense taken during the holding period. This isn’t just a simple number. Some calculations are involved in determining the amount of depreciation that investors must pay back at the time of sale.
Can 1031 Timelines Be Shortened?
The total time frame for a 1031 exchange is 180 days. The clock starts once the relinquished property closes. However, there are cases when the timeframe is compressed and doesn't allow for the full 180 days. Investors who are looking to do a 1031 exchange need to be aware of when they may not have the full exchange period available to them.
Is Raw Land a Good Investment?
Real estate investors have a multitude of choices - residential rentals, other commercial properties like office buildings and hospitality centers, retail operations, and more. Every class and sector offers potential pros and cons. Investors can also decide to purchase real estate-backed securities or fractional interests in asset portfolios by investing in REITs (Real Estate Investment Trusts) and DSTs (Delaware Statutory Trusts).
What is an Immediate Power of Attorney?
A power of attorney is a designation that another person has the authority to make decisions on behalf of the power grantor. Typically, you would grant a power of attorney to someone either for convenience or necessity.
Can Distributable Net Income (DNI) Exceed Taxable Income?
Distributable net income (DNI) is a tax deduction allowed by trusts. DNI must be calculated to determine its value. Part of the DNI calculation includes taxable income. If taxable income is part of the DNI calculation, does that mean taxable income is always equal to or less than DNI?
