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If you are an investor considering a #1031 exchange, there are many pitfalls to avoid to ensure a successful exchange. One of these is the nature of the property you plan to trade.
One of the key requirements for a real estate exchange to qualify under section 1031 for tax-deferral is that the property involved was held for either investment purposes or for productive use in trade or business. In many cases, this is a fairly straightforward proposition to prove. However, in other…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 28, 2017 at 7:23am — No Comments
For the real estate investor looking to move up in terms of the value and ROI of their real estate investment property, considering a co-ownership arrangement can be a very lucrative decision. After all, when multiple investors go in, they can buy a bigger and better property than would be possible on their own.
So what if you could leverage the power of fractional ownership and buy in to a rental property that delivers corporate level returns (including monthly cashflow) without the…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 27, 2017 at 8:55am — No Comments
Real estate is a natural choice for investors looking to grow their portfolios. Steady appreciation and a convenient monthly income stream are two reasons why investing in rental real estate is so attractive to many investors.
However, for some investors, dealing with the daily hassles of property management can put a tarnish on investment real estate’s shine. If you’d like to enjoy the upside to investment property, without the headaches, perhaps it is time to consider a self-storage…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 26, 2017 at 8:49am — No Comments
Intelligent investing requires a hybrid approach to putting your capital to work.
You’ve got to be strategic if you want to invest successfully. In order to achieve consistent returns, keep risk low, and keep the maximum upside potential, investors have to be diversified. They need a hybrid financial plan that will deliver the results they need, year after year.
Just look at the auto manufacturing industry. Traditional gas-powered car makers started taking a hit when…Continue
Added by Fuquan Bilal on April 25, 2017 at 9:32am — No Comments
Some investors new to the benefits of section #1031 often believe that “like-kind” means that both the relinquished and replacement properties must be identical in every way. This is, of course, not true. The “like-kind” requirement, in a nutshell, simply means that both properties must be similar in nature or use. There is no requirement that both properties share identical values.
In fact, many 1031 exchanges are conducted where there is a significant difference in the price of the…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 24, 2017 at 7:46am — No Comments
If you’re planning to execute a #1031 exchange to sell and replace investment or business property, there is one very important concept you must understand. It is how and when to include an Exchange Cooperation Clause in your contracts for sale.
Why is this clause important? An Exchange Cooperation Clause alerts the other party (and any interested third party entities) to the fact that your transaction is part of a 1031 exchange. More importantly, the clause requires the other side to…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 21, 2017 at 7:06am — No Comments
With tax reform on the front burner of the new administration, investors large and small are obviously thinking about the fate of section #1031. While the future of 1031 exchanges has been the subject of much debate in recent years, no administration has moved forward with dramatic revisions – or elimination – of this popular section of the tax code.
Will that change in 2017? Perhaps. While the current Republican blueprint for tax reform – dubbed “A Better Way” – makes no direct…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 20, 2017 at 10:19am — No Comments
Real estate investors understand the power of a #1031 exchange for deferring capital gains. By selling existing investment or business property and then replacing it with “like kind” property, capital gains tax can be deferred (in some cases indefinitely). This also gives an investor more immediate capital to invest into bigger and better properties.
But what happens when an investor finds the ideal replacement property before they sell their existing investment property? Do they have…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 18, 2017 at 10:18am — No Comments
If you have a piece of investment or business real estate you no longer want, what are your options? You could sell it outright and take the immediate tax hit. Or you could consider a #1031 exchange.
If done correctly, a 1031 exchange allows an investor to defer paying all the capital gains taxes, which equates to a long-term and interest-free loan from the IRS. Nice, right? In addition, the investor then has all their gross net equity available to reinvest so they can acquire bigger…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 16, 2017 at 12:59pm — No Comments
Your planned #1031 exchange is sailing along. You’ve sold your relinquished property, identified a few potential replacement properties and things are looking good. But even when everything appears to be on track, there is one way you can jeopardize it all – by failing to give proper notice.
The IRS granted safe harbor rules for exchanges to make the entire process more reliable. However, within these safe harbor provisions, the IRS also provides some “must do” requirements on the…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 13, 2017 at 7:57am — No Comments
A #1031 exchange can be an excellent way for an investor to rapidly build their real estate investment portfolio. By avoiding immediate capital gains taxes on the sale of investment or business real estate, an investor has more capital to reinvest – allowing them to purchase bigger and better properties.
But the ability to avoid immediate capital gains leads some to believe that section 1031 is a tax loophole. This is a more common myth than you might think, and one that should be…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 12, 2017 at 11:53am — No Comments
Since section 1031’s introduction back in 1921, the concept of an exchange has continued to evolve. And because the code is not crystal clear on some concepts, investors often seek guidance from the IRS – in the form of Private Letter Rulings – about non-traditional exchanges.
One issue that comes up with more regularity than you might think is the concept of exchanging easement interests (conservation or agricultural). First, can they be considered as “like-kind” to real estate?…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 11, 2017 at 8:57am — No Comments
Where are interest rates headed this year? What will it mean for you?
One of the biggest expectations of 2017 is changing interest rates. How high will they go? What will it mean for real estate buyers, owners, sellers, and investors?
While there appears to still be a lot of uncertainty around exactly what Trump will be able to accomplish, and how quickly, everyone seems to agree that interest rates are heading up. That’s not necessarily a bad thing, but it should inject some…Continue
Added by Fuquan Bilal on April 10, 2017 at 10:06am — No Comments
One area that catches potential exchangers off guard (and torpedoes the exchange altogether) is the concept of constructive receipt. While actual receipt is easy to identify – the exchanger directly receives the sale proceeds from the relinquished property, constructive receipt is a little more ambiguous.
In actual receipt, it doesn’t matter what form the funds take – cash or wire transfer into an account. The bottom line is if the exchanger has direct access to the funds at any time,…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 8, 2017 at 8:26am — No Comments
Many of my clients are individual investors, buying and selling investment real estate to grow their portfolios. One common question I hear from these clients is “how do I grow my investments faster?” They are concerned that the amount they have available invest on their own is simply not enough to achieve the long-term growth they desire.
One option I often suggest is fractional or co-ownership in the form of a Tenancy In Common (TIC). This type of joint ownership allows an…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 6, 2017 at 10:18am — No Comments
Here and here, we introduced you to #1031 exchanges and some of the basics every investor needs to know about these popular tax-deferral transactions. Today, we conclude the series with our final list of the key points to…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 5, 2017 at 8:05am — No Comments
Why is America’s leading mortgage note fund manager incorporating hard assets into its newest offering?
Heard about the launch of the NNG Capital Fund?
The NNG team and our long-term capital partners are incredibly excited about the launch of the next generation offering – the NNG Capital Fund. It combines the best of what we have been doing, with a few enhancements. So, what are we doing, and why?
NNG: The Nation’s Note Investment…Continue
Added by Fuquan Bilal on April 3, 2017 at 11:39am — No Comments
Yesterday, I introduced you to some general concepts about #1031 exchanges. These popular transactions allow investors to defer capital gains tax when swapping business or investment property (real or personal). I also listed a few of the key things you need to know if you are considering a 1031 exchange.
Here are several more basics of this appealing…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 2, 2017 at 12:57pm — No Comments
Whether you’re a seasoned #1031 veteran or an investor new to the game, you’ll likely encounter some unfamiliar concepts surrounding these lucrative and beneficial real estate transactions. You also might have some questions.
But first the most basic concept.
A 1031 exchange allows an investor to swap one business or investment asset for another. Under normal circumstances, the sale of these assets would incur tax liability for any capital gains. However, if you meet the…Continue
Added by Dr. Robert G. Hetsler, Jr. on April 1, 2017 at 12:33pm — No Comments