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If you own
investment property (real estate) in Southern California, you probably have
experienced equity growth in these past years. You may be reluctant to sell and
pay the tax on the gain.
Is there a way to
increase your Portfolio of Real Estate without digging into your pocket?
Consider this:
Whether an investor owns a property all cash or with leverage, the
benefits of a tax deferral are significant. The tax dollar saved can be
utilized to purchase additional property. The example below shows the
significant advantage of exchanging for an investor who sells a $425,000
property that has been fully depreciated and that was debt-free. This example
assumes the client is subject to a combined federal and state tax bracket of
35%.
The investor who executed a property 1031
Tax Deferred Exchange defers the payment of capital gains taxes.
Example
|
Sale |
Exchange |
| Net Equity (minus
cost) |
$400,000 |
$400,000 |
| Taxes (35%) |
$150,000 |
None |
| Funds to Reinvest |
$250,000 |
$400,000 |
If an investor leverages his new property to 70% by putting 30% down,
he/she could purchase properties totaling:
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|
Acquisition
Value |
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| $833,000 |
$1,300,000
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By completing a 1031 Tax
Deferred Exchange, the investor has increased his/her portfolio by
$467,000!!!
Remember rental houses qualify as
investment property. The 1031 Tax Deferred Exchange is one of the last tax
shelters allowed by the IRS.
Contact me by
clicking on this link to find out more about 1031 Tax Deferred Exchanges and
find out if your investment property qualify. |
Closing or Settlement >Closing Questions
Because of the complexity of a real estate transaction, questions and concerns arise frequently for those who are buying or selling a home. Most people experience a degree of stress at the closing of the sales transaction. Both parties are probably feeling nervous and vulnerable as they sign the papers, and may even be fighting off an attack of buyer's or seller's remorse.
Even though you may be inclined to just sign the papers, it is a good idea to check the paperwork and ask any questions that come to mind. If you are signing a mortgage or deed of trust, be sure to review the document carefully. Check the spelling of your name, the property address and all of the inserted items for accuracy. Since much of the paperwork is prepared on short notice, mistakes are occasionally made. They are usually easier to fix while you are still at the title office, so don't be shy about asking questions before you sign on the dotted line.
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| Q |
During what great land boom (1919) did investors pay up to $25,000 for lots that had not yet been dredged up from the ocean?
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| A |
The Florida Land Boom--Carl Fisher founded Miami Beach that year and brought hundreds of investors to the state. |
 See More Real Estate Trivia > |
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- NUMBER1EXPERT™ 
