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What Is an Involuntary Conversion?
While real estate investing can offer the potential to increase personal net worth through passive income, it is important to note that no asset class doesn’t come without its own set of potential risks. Yes, there will always be a need for residential housing or commercial facilities, but there are still bumps in the road in the world of real estate investing. One such example is found in involuntary conversions, which can force investors to significantly alter their investment. Understanding what involuntary conversions are and the dangers they present is important when making informed decisions about your own investing.
Can I Aggregate Single-Family Rental Houses for QBI Purposes?
When the Tax Cuts and Jobs Act was signed into law back at the end of 2017, it allowed a new tax deduction under Section 199A of the tax code of 20 percent for qualified business income (QBI).
What Closing Costs Are Tax Deductible for Rental Property?
Rental properties are a great investment opportunity, but there are upfront costs. Purchasing your rental property involves getting a mortgage and paying closing costs.
Who Can Be a Trustee of a Charitable Remainder Trust?
Charitable remainder trusts are useful tools for estate planning. You have the potential to earn an income, reduce the amount of taxes you pay on your assets, and benefit a charitable cause simultaneously. When creating your trust, you may wonder who will administer your assets in the event of your death or once the trust terminates. This is the responsibility of the trustee.
What Does Loan to Value Mean in Real Estate and How Do You Calculate It?
Financial institutions and other lenders use the loan-to-value (LTV) ratio to determine how much risk they’re taking on with a secured loan. Loan assessments with high LTV ratios are typically seen as higher-risk loans and may come with higher interest rates and could require the borrower to purchase mortgage insurance.
How Much Does Real Estate Appreciate Per Year?
Real estate investors are motivated by various goals, including wealth accumulation, tax management, and pride of ownership, among others. Certainly, many hope that the property they buy will appreciate in value. Appreciation of an asset is an increase in value over time. Whether it occurs, how fast, and how much depends on external factors like supply and demand. While appreciation is typically viewed as a positive outcome, investors should prepare for it since if they sell appreciated property, they may owe taxes on the capital gain that the increase in value represents. Savvy investors should employ strategies to mitigate the impact of this circumstance by seeking professional financial and tax advice.
What Is a Class A, B, or C Property?
Real estate investments come in many categories, including sectors like retail, office, healthcare, and hospitality, and asset class, including A, B, C, and even D. What determines a property’s class may include age, location, amenities, finishes, and rent.
What Is a Charitable Remainder Trust and How Does it Work?
Trusts are often complex, and there are many types. Therefore, it's always a good idea to have expert assistance when establishing one, especially if the trust is irrevocable. According to the Business Dictionary, the definition of a trust is "a legal entity created by the trustor through which the trustee holds the right to manage the trustor's assets or property for the benefit of the beneficiary." The main types of trusts are living, testamentary, revocable, irrevocable, funded, and unfunded. Within each of those, there are further variations.
What Is Private Credit?
As a subset of alternative credit, private credit can also be referred to as private lending, direct lending, or non-bank lending. It can be described as an asset class where the debt is not issued or traded on the public markets. They can be comprised of potentially higher-yielding, illiquid investment opportunities ranging from senior secured debt with income-like characteristics to distressed debt with equity-like risk and returns.
What Is a Recourse Loan and How Does it Work?
Lending money involves significant amounts of risk on behalf of the lender. To help minimize risk, lenders typically set strict requirements to get the best interest rates on loans. However, lenders may go even further to reduce risk by offering recourse loans.
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