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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. |
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Buying Land and New Construction >Testing the Soil Are you building a custom-designed home on hand picked acreage? An essential step is testing the soil, which will determine the composition of the ground that must provide a stable foundation for your new home.
The soil could have a combination of various conditions and characteristics. It might be fine, silt-laden soil that collapses when it absorbs excessive water, or soil with a high clay content that sucks up water and then expands under a building, causing it to buckle or shift. Such soil is easy to excavate but unstable to build on. It must be replaced in compacted layers until it achieves suitable density to provide a stable foundation for the house.
On the opposite end of the spectrum, your land might sit on a layer of hard rock, which is wonderfully stable, but extremely hard to penetrate. Excavation costs will be higher if your builder has to bring in heavy equipment to dig out the rock.
A professional soil report will help your builder determine the best approach to engineering your site.
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| Q |
What acclaimed house built of stone, concrete, and glass is built over a waterfall?
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| A |
Fallingwater in Mill Run, PA, built by architect Frank Lloyd Wright, is one of the most-visited homes in the U.S.
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 See More Real Estate Trivia > |
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- NUMBER1EXPERT™ 
