How to Talk to Your CPA About 1031 Exchanges, DSTs, and QOZs (Checklist + Questions)
Navigating the intricacies of 1031 Exchanges, Delaware Statutory Trusts (DSTs), and Qualified Opportunity Zones (QOZs) can be a daunting task for any investment property owner. These real estate strategies offer significant tax-deferral opportunities but come with their own rules and nuances. Engaging with a knowledgeable Certified Public Accountant (CPA) can be instrumental in ensuring that you're maximizing these opportunities while remaining compliant with IRS regulations. Here’s a guide to discussing these topics with your CPA, complete with a useful checklist and pertinent questions.
What to Do When Your Rental Is Fully Depreciated: Exit, 1031 Exchange, or DST?
When you've owned your rental property long enough for it to be fully depreciated, you face critical decisions about the best course of action. A fully depreciated property, having reached the end of its IRS-designated useful life for tax purposes, no longer offers depreciation tax benefits. Here, we'll explore options including exiting the investment, executing a 1031 Exchange, or leveraging a Delaware Statutory Trust (DST).
Selling a Rental You’ve Owned for 20+ Years: Options to Defer Taxes and Preserve Income
Owning a rental property for over two decades is a significant achievement that comes with financial rewards and tax obligations. Whether you've decided to cash in on its appreciated value or simply need a change, selling a long-held rental property involves key financial considerations, especially regarding taxes. Understanding how to defer taxes while preserving income can make this transition smoother and more profitable.
What Are the Common Misunderstandings About 200-37 and Related Tax Codes?
Code 200-37 or Revenue Procedure 2000-37 created the safe harbor guidelines for 1031 reverse exchanges. While the rules are clear, many myths about the 200-37 tax code have emerged over the years, stemming from oversimplified explanations or outdated interpretations. Some are harmless, while others could lead to major issues that may result in the loss of your tax-deferral status.
Are There Any Common Mistakes To Avoid When Completing Form 8824?
As you likely already know, investing in 1031 exchanges brings benefits like tax deferral and enhanced diversification, but the IRS imposes strict rules and reporting processes for those who undergo this transaction. One critical document that you must accurately fill out is Form 8824, which is also called the Like-Kind Exchanges form.
What Are the Pros and Cons of a Section 721 Exchange?
Among the various real estate investment strategies out there, Section 721 exchanges have risen in popularity thanks to their benefits to investors and ease of entry. This type of transaction allows you to join an umbrella partnership real estate investment trust (UPREIT). As you own operating partnership (OP) units, you become entitled to dividend distributions.
