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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
|
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. |
Real Estate Contracts >Deadlines
Both buyer and seller should be aware of all of the deadlines in their purchase agreement. Each contract is different, but there are usually time limits covering the structural contingency, the financing application, the loan commitment, and the closing.
If you are a careless buyer, you could lose your right to ask a seller to pay for needed repairs. There may be a limit on the time the seller has to respond to the buyer's request to complete repairs that are not required by the contract. Failure to apply for your mortgage on time may place your deposit at risk if the loan is denied. In many cases, the agreement can be declared null and void by the seller if financing is not approved within the time frame set forth in the contract. A delayed closing can cost the sellers money, and they may ask the buyer to reimburse these expenses.
Work closely with your real estate agent to ensure that all of your transaction deadlines are met.
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| Q |
Where in the United States will you find the largest concentration of million-dollar homes?
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| A |
There are almost 314,000 million-dollar homes in the United States, and 41% of these are located in California.
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 See More Real Estate Trivia > |
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- NUMBER1EXPERT™ 
