What are the Two Kinds of Boot in a 1031 Exchange?
Real estate investors have used 1031 exchanges for decades to defer capital gains tax liabilities generated from the sale of investment properties.
What is the Difference Between Inheritance Tax and Estate Tax?
Inheritance and estate taxes have common threads, but they are different. Taxation and how it is applied for both are quite different. Not everyone will have to worry about these two taxes. Most states do not have either one. But some states have both. These may sound like confusing taxation laws so let's unwind both.
What Assets are Subject to Depreciation Recapture?
Depreciation of fixed assets provides an important tax deduction for real estate investors and business owners. Depreciation can be applied to a wide range of long-term fixed assets. It’s an important tax provision because it allows businesses or investors to deduct a portion of the cost of buying physical assets over time instead of all at once. Depreciation deductions also lower taxable income, which can help maximize tax savings.
What Happens When a 1031 Exchange Straddles Two Tax Years?
Some 1031 exchange executions start in one year and finish in another. This is called straddling tax years. Usually, this is no more than two years. What are the tax consequences when a 1031 stretches across two years, and what does it mean for the outcome of the 1031?
What is the Capital Gains Tax Rate on Jewelry?
Picture this. You own a fine piece of jewelry, a ring. Perhaps this ring has been in your family for a while. Your insurance company valued the ring at $4,000.
What is the Difference Between Raw Land and Unimproved Land?
Is there any difference between raw and unimproved land? They sound like the same thing. Some people use these terms interchangeably. But yes, there are differences. Land types can be broken into several categories. Land lenders mostly use those categories.
Are Trust Funds Subject to Inheritance Tax?
Taxpayers may establish trust funds to pursue several goals, including orderly distribution of assets, tax management, and a desire to provide income to beneficiaries. Often, tax management is a priority. Keep in mind that federal estate taxes only apply when an estate's value exceeds $12.06 million. Very few estates meet that threshold. However, the tax rate imposed on amounts over the threshold is forty percent, which can take a hefty bite out of an inheritance.
What is a Section 121 Exclusion?
One of the motivators for buying real estate is that it tends to appreciate. Of course, this result isn't guaranteed, and there are notable periods when real estate values have dropped. However, buying real estate is a good bet over time, and you may earn significant increases in value. This potential outcome applies to both investment property and personal use assets.
Does a 1033 Exchange Require a Qualified Intermediary?
When hurricane Ian hit southwest Florida in late September of 2022, it destroyed more than 5,000 homes in Lee County and severely damaged another 13,000 residences.1 The damage wrought by Ian left thousands of homeowners pondering their next steps. Homeowners and investors who owned condemned properties may be able to complete a 1033 exchange to replace homes that were destroyed or severely damaged by the hurricane’s wrath.
Can You Sell a House that is Under Construction?
Real estate investments are often attractive to buyers as a potential means to wealth accumulation, and residential dwellings also have the emotional appeal offered by a place to call home. Owning your home is part of the American dream, and many extend the vision by turning a property into income. Still, real estate is volatile and subject to ups and downs.
