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One cardinal rule of a #1031 exchange is that the investor cannot have actual or constructive receipt of the relinquished property proceeds during the pendency of the exchange. To accomplish this, the investor must retain the services of a qualified intermediary. Given the financial duty of the qualified intermediary, you can see how important it is to hire a reputable individual for the role.
One of the biggest questions any investor should be asking before they settle on a Qualified…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 30, 2017 at 8:18am — No Comments
Although not much seems to be getting done in Washington at the moment, tax reform is still on the short list of goals for the current administration. And although section #1031 isn’t directly mentioned anywhere in the “Blueprint for Tax Reform” that began circulating in 2016, there are certain things that are mentioned that indirectly implicate this favorite tax-deferral strategy.
But what would the impact of repeal actually be? Would it only impact investors, keen on deferring…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 28, 2017 at 9:18am — No Comments
If you’re thinking about completing a #1031 exchange to trade investment or business real estate, you should have a thorough understanding of all the deadlines involved. Failing to meet even one can jeopardize the tax-deferred nature of your transactions.
The good news is that there are two main deadlines, and compliance is not complicated. It does, however, require due diligence and careful counting of calendar days.
Added by Dr. Robert G. Hetsler, Jr. on July 26, 2017 at 5:58am — No Comments
If you are an experienced #1031 exchanger, then you already know that special rules apply when you are conducting an exchange with a related party. (If you don’t know about these rules, read up on them here.)
However, you may be unclear on who, exactly, qualifies as a related party. As in so many things, the IRS throws a broad net over this group. The usual suspects…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 25, 2017 at 7:55am — No Comments
What does the latest home flipping data reveal about the housing market now?
Around $3.5B in house flips were financed in the first quarter of 2017. However, how they are being acquired and who is buying them may be changing this year.
Financing is Coming Back
Home flippers are increasingly using financing to make acquisitions instead of cash. We are now seeing the most home flips being financed since 2008. Almost $1B more than in the first quarter of 2016. Yet, this is…Continue
Added by Fuquan Bilal on July 25, 2017 at 2:39am — No Comments
When the concept of #1031 exchanges were first introduced in the early 1920s, the original intent was to aid two parties in the simultaneous exchange of real estate. Party A and Party B exchanged real estate with each other and contributed cash if the selling and purchase prices didn’t equalize out. It worked great, until it didn’t. After all, how often could an investor find another similarly situated investor to exchange property with? Gradually, deferred exchanges became the…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 23, 2017 at 9:23am — No Comments
Section #1031 of the IRS Code is both a blessing and a curse. While it can offer potentially impressive tax-deferral benefits, it can also bring with it a lot of stress and uncertainty to catch the inexperienced 1031 investor off-guard. Oftentimes, an investor can make a mistake without ever realizing it, leading to unexpected tax consequences down the road.
Here are three very common mistakes made during the exchange process.
Misapplying IRS Timing…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 22, 2017 at 8:53am — No Comments
Industry experts say yes. However, with interest rates rising and market prices topping out (or even falling), a solid risk assessment is required before committing to any replacement property. This is especially true when it comes to taking on additional debt.
Read a detailed analysis plus the pros of Delaware Statutory Trusts in the #1031 exchange process …Continue
Added by Dr. Robert G. Hetsler, Jr. on July 19, 2017 at 6:30am — No Comments
What makes mortgage notes valuable for reselling to note investors?
Seller financing appears to be rising again. It likely will continue this trajectory until banks offer easier access to borrowing, and they can rebuild trust with those with capital, and give them a larger share of the profits. Creating seller financed notes can be a great creative solution to a variety of real estate scenarios. It can be a highly profitable choice for many sellers and investors. Though while it can…Continue
Added by Fuquan Bilal on July 17, 2017 at 3:34am — No Comments
The whole point of a #1031 exchange is to allow for the deferral of capital gains tax on the sale of investment or business property. When done correctly, a series of subsequent, consecutive exchanges can allow an investor to defer capital gains taxes for decades and even indefinitely in limited situations.
However, when you rely on multiple exchanges to defer capital gains, one thing is non-negotiable – keeping accurate records. The risk of an IRS audit could happen at any time. Even…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 16, 2017 at 9:47am — No Comments
Summer is finally here, and the living is easy. Especially if you are enjoying time at your second home. But if you’ve decided that this might be the last summer spent at your favorite escape destination, you might be wondering how to minimize the tax implications of selling your current vacation home.
Utilizing a #1031 exchange to move from one vacation home to another, maybe in a different city or state, is a great idea. It allows you defer capital gains taxes on the transactions,…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 13, 2017 at 10:27am — No Comments
When it comes to executing a 100% successful 1031 exchange, the IRS has strict rules for determining compliance. Failing to meet even one of the requirement can subject you to partial or full capital gains tax liability.
To fully defer all capital gains taxes, you must:
(1) buy replacement property that is equal or greater in value than your relinquished property,
(2) use all the cash proceeds from the sale of your relinquished property toward the purchase of your…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 12, 2017 at 12:51pm — No Comments
When it comes to effectively conducting your #1031 exchange, one of the most important partners you will rely on is the qualified intermediary (QI). This is the individual who will help facilitate your exchange, and will hold the exchange proceeds during the exchange period.
Because the QI will have control of your money, it is important that you thoroughly research any potential QI ahead of time to ensure that they have appropriate security and safety measures in place to ensure the…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 11, 2017 at 11:37am — No Comments
Fed Chair Janet Yellen says there is no financial crisis to worry about in our lifetimes. Why is she so confident? Do we believe it?
In late June 2017, the Federal Reserve Chairwoman spoke out from a London event, declaring it is unlikely we will see another financial crisis in our lifetimes. Her adamant bullishness on the…Continue
Added by Fuquan Bilal on July 10, 2017 at 3:02am — No Comments
Whether you are new to the world of real estate investing or are a seasoned veteran, the idea of a high return, low involvement investment opportunity is always difficult to ignore. And much of the time, these seemingly impossible investments are just that – smoke and mirrors. But not all.
If you are searching for a low risk opportunity with reasonable returns and no management headaches, the world of Self-Storage Tenancies in Common might be ideal for you.
Imagine a real…Continue
Added by Dr. Robert G. Hetsler, Jr. on July 9, 2017 at 5:53am — No Comments
One of the biggest conundrums facing investors is what to do with investment real estate when relocation is in their future. Typically, this phenomenon hits aging investors close to retirement the hardest. They’ve worked hard to build up a solid portfolio of real estate close to home. Yet with retirement around the corner, they have a desire to seek out a more hospitable location for their golden years.
The question then becomes “what to do with their investment property?”
Added by Dr. Robert G. Hetsler, Jr. on July 6, 2017 at 9:11am — 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 July 4, 2017 at 1:23pm — No Comments
Airbnb is surging as a trend and amateur investment strategy. What are the pros and cons of this for mortgage note investors?
Airbnb is the short-term rental platform which enables property owners and even tenants to lease and sublease their units to business, vacation, and location independent travelers. Much of the controversy over the legality of Airbnb rentals has quietened down, just like in the…Continue
Added by Fuquan Bilal on July 3, 2017 at 3:08am — No Comments