1031 MN

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Open Source Documents-Unbelievable Resources-Find YOUR topic of Interest

If you’ve never visited http://www.Archive.org, you are missing a wonderful site.  From this site, you will find many resources that are out of copyright and you can download and use them as you wish.  You will find all the classics and some fun things as well.  Just for fun, I have the download of a book called “Little Gardens” which is a book about setting up a garden on a city lot.  This is just one of the MANY fun things you’ll find.  You can download and watch old music, movies, and cartoons as well.  Plan to spend some time on the site should you decide to visit, as it is very cool.  Click here to download the book Little Gardens

Sell Your Home Faster-Learn The Home Selling Secrets Of Successful Sellers

Here is a special report that outlines over 450 ideas on how to sell your home faster.  This report is just one of the many home buyer, home seller, and investor reports that I can make available to you.  Read this report and call me to arrange a time to see how I can help.  Download Now

Extension And Expansion Of Home Buyer Credit-4/30/2010

A Big WOW!!  The credit has been expanded to include homeowners who have owned their home for the past 5 years. No longer do you need to be a first time buyer.  The dollar limit is $8000 for first time buyers and $6500 for move up buyers.  This GREAT news.  Combine this with 50 year lows in interest rates, and you’d be crazy not to consider making a move.  If you feel secure in your job, think hard about buying  home at this time.  We can help you make the right move. Visit this site-which is from the National Association Of Home Builders  http://www.federalhousingtaxcredit.com/faq2.php This site give you all the rules and regulations as they now apply.

Why Foreclosure Is Often Preferred By The Loan Servicer Instead Of Offering A Loan Modification

Have you ever wondered why a foreclosure occurs when a better solution might have been a modification?  Would you like to read the facts and figures and see how mortgages are bundled, sold and serviced?  You will soon see it is isn’t pretty, we are in the midst of a crisis, and it is likely to get worse before it gets better.  That being said, you can probably guess why-it’s about the money.  It is a little more complex than that-the report is 60 pages-but is explains the incentive and disincentives that are at conflict within the mortgage market today.  Once you understand how all the pieces go together, you can see that something “different” needs to be done.  I am a strong free market believer, but in this case, the government needs to have a mandate and rule that is guided towards keeping people in their homes.  Left to current industry solutions, the mortgage mess will continue to play out and get worse.  If you click on the link below, you will find the free report from the National Consumer Law Center.

http://www.consumerlaw.org/issues/mortgage_servicing/content/Servicer-Report1009.pdf

Home Buyer Tax Credit Information Update

It’s now official!! The tax credit has been extended and expanded. YOU NEED TO HURRY! You now have until the end of April 2010. The following summary of the credit is provided by the National Association Of Realtors. The following two documents cover the changes in the new law. Now get out there and buy a home!!

NAR FAQ: Homebuyer Tax Credit Changes
NAR Issue Brief: Homebuyer Tax Credit Changes

Key Considerations of a 1031 Exchange

Don’t make mistakes when doing an exchange that would cause it to be disallowed by the IRS.  There ARE rules and requirements that need to be followed.  Working with experts-like First American-can help you get the guidance and access to the rules that you need to know and adhere to.  Tax deferral is just an exchange away.  Print out a copy of this PDF and follow the rules.   Click Here for the PDF

Benefits of a 1031 Exchange

One of my exchange partners is First American. They have put together a great reference piece on the benefits of a 1031 exchange. You might want to print this PDF and share it with your accountant or legal advisor. If you need help with the real estate portion-just ask and I’d be happy to help represent you in your exchange. Click Here for the PDF

Minnesota Real Estate Newsletter Gives Access To Great Computer & Life Tips

I maintain a number of real estate sites, blogs, and newsletters. One newsletter that provides a number of computer tips to help you function better with a computer is http://www.REcyber.com/cybertips/r11627 The site is full of cyber space tricks and great places to visit. We have link to this site on the list of MN Real Estate links, but I wanted to highlight this particular newsletter because it different from what most agents provide. From this newsletter, you can also access all the back issues-from 2001 and beyond. It is really quite a useful resource-spend some time there if you have a chance.

Buy A Minnesota Investment Property With Confidence

RE/MAX has put together a “how to guide” on how to buy investment property. Since knowledge is power, get the guide and brush up. It’s your money-get the information you need to become a successful Minnesota investment property investor.

What Constitutes A Like Kind Exchange Vs An Outright Sale?

If you are one of the many people who have caught on to the fact that there is a lot of money to be made in real estate, then you are already on the right track. You can really build your wealth by purchasing and selling real estate, especially if you do it right and take advantages of systems and tax breaks out there. If you are interested in selling one of your investment properties and then purchasing another, you want to make sure that you are looking into like kind exchanges.

Section 1031 from the IRS allows you to defer your taxes on the proceeds from the property you sell if you are taking all of those proceeds and investing them into like kind exchanges. This means that you are taking the money you gain and purchasing one or more properties with it. The thing about the deferred exchange though is that you have to be careful to make sure that you are playing by the rules. There are a lot of stipulations, rules and time lines that have to be paid attention to.

The first thing you need to understand is just what exactly the like kind exchange is. First, figure out what the fair market value is of the investment property that you are selling. Whatever that fair market value is, the new property or properties have to be of the same value or greater. This means that you could have a fair market value of $50,000 on the property you are selling and have a total fair market value of anything above that on the property or properties that you are exchanging it for.

The properties, both the one you are selling and the one you are purchasing must be investment properties that are not and will not be your place of residence to be considered for qualification of the like kind exchanges. These can be rental properties though, which means others can live in these properties, just not you.

The like kind exchanges can be single family homes, multi-family homes, parcels of land, apartment complexes or any combination of these. You just want to make sure that the property or properties that you are investing in meet the strict qualifications for the like kind exchange. To make sure that there are not any problems, you will want to review the IRS site, consult with a real estate attorney and find a quality exchange company that will help you through the process.

The quality exchange company is the neutral third party that holds onto the proceeds from the property you sell and then sends it to the appropriate places when you finally purchase the investment properties that you are using as the exchange. You cannot complete a 1031 like exchange unless you use a quality exchange company.

One thing that can mess up the like kind exchanges is waiting until the last minute to get everything done. You will want to make sure that you are moving as fast as possible, especially since the 1031 exchange regulations do not give people a lot of time. Even if you just one to exchange your property with one other, you might want to find two or three that you would not mind investing in.

This is because you have only forty five days from the date of the sale of the property you are getting rid of to name the properties you are interested in obtaining. You then have a total of one hundred and eighty days to complete all transactions, including the transaction of purchasing the new property. If you name only one property during your initial forty five days and that sale falls through because of something on the other’s person’s end, you are out your chance to take advantage of the like kind exchange and the tax deferment that comes with that.

But, if you have two or three properties named, then you can move on to another on your list should the first one you are interested in fall through. Since you have a limited amount of time, you have to make sure that you are planning ahead and preparing for complications that could arise. This is the only way to really ensure that you are going to be able to take full advantage of the deferred exchange and gain all of the tax deferment benefits.

In order to make sure that everything runs smoothly for you, you will want to make sure that you are doing as much research on the like kind exchanges as possible, before you decide to go for it. Learn from the mistakes of others and gain helpful tips and insider tricks from those who have been through the like kind exchange before. The more you know and the more you are prepared for, the easier it will all go for you. It might seem a little complicated at first but once you go through the process once you will see that there really is not much to it once you know the rules of the game. It will continue to get easier and easier each time you decide to take advantage of the 1031 exchange.

Who Can Act As The Qualified Intermediary For Your 1031 Exchange?

So you have finally decided that you want to sell an investment property and pick up another. You already know that there are taxes that are typically due within the tax year that you sell the property. But what if you would simply rather take that tax money and reinvest it into the same type or kind of investment property or something even better? Can you actually do that? Yes, with the 1031 you can but there are many laws and guidelines that will have to be strictly followed in order to make sure that it goes through okay.

The first thing you need to realize is that you might need a little help understand all of the rules and the timeframes that you will be looking at. You can hire a real estate attorney or simply ask the qualified intermediary to help. Since you have no choice but to hire a qualified intermediary, you might as well take full advantage of their services and see what all you can learn from them. You cannot complete a 1031 exchange without a 1031 exchange company so it is important to make sure that you are not forgetting about that step. But just what exactly does the qualified intermediary or the 1031 exchange companies do for you?

The intermediary is also referred to as a accommodator or a facilitator. This is a person, or in most cases a company, that acts as a neutral third party in the real estate transactions. This person or 1031 exchange company will enter into a written agreement with you regarding the exchange. They will acquire and then transfer the property that you are selling. Then they will acquire and then transfer to you the replacement property that you are taking on. It may seem overly complicated but it really is not. Once you get started with the process you will see how easily it all comes together.

The agreement will also explain that you are not in any way allowed access to the proceeds from the property you sell. Since you will not be paying taxes on those proceeds right now and they are to be used specifically for a replacement property, there really is no need having access to the money. The qualified intermediary holds onto the money for you. They are basically the “go-between” for your real estate investment transactions. They will hold onto the proceeds and use them when the time comes for the purchase of your new replacement property or properties.

You might also be interested to know that the fees for using a 1031 exchange company will vary. Typically though, you are looking at about five hundred dollars for the first time you use the qualified intermediary. In most cases, this fee amount will decrease each time you have to use them for the purpose of a section 1031 exchange.

It is also important to make sure that you are making sure that the right wording is contained within you contract with the 1031 exchange companies that you use. If you are worried about this part, you might want to have an experienced real estate attorney take a look at the contract to make sure that everything reads how it should. You just never know when something is going to come up so you want to make sure that you are being proactive and preventing problems from even taking place.

Once you have found the 1031 exchange company that you are going to use, it is important to make sure that you are researching the various rules and guidelines yourself. Even if you have a real estate attorney and an exchange company helping you out, you are responsible for making sure that you are staying within the guidelines set forth by the IRS and that you are getting all of the tax advantages that you should be getting.

The most important thing to pay attention to is the time frames given for the 1031 exchange. For example, you only have forty five days from the date you sell your property to submit, in writing to the qualified intermediary, the information on the replacement property or properties that you are looking to purchase. This forty five day mark is exact and there are no exceptions to the rule. Then you only have a total of one hundred and eighty days from the sale of your property to completely purchase and complete the transaction of the new property or properties that you are taking on.

As you can easily se, one slip up or one overlooked thing can cause you to miss out on the advantages of the 1031 exchange. So make sure that you are reviewing the website of the IRS, consulting with a real estate tax attorney selecting a qualified 1031 exchange company. By taking all of the right steps you will find that you are able to grow your real estate wealth quicker than you ever thought you could before. Why pay on those taxes now when you can get them deferred and use that money more wisely, such as investing in bigger and better real estate?

How Can I “Buy” A Replacement Property before Mine Is Sold?

Sometimes, the perfect investment property comes along as though it was fate. The problem is that the property you are trying to sell has not yet sold and you wanted to take advantage of the 1031 exchange. The 1031 exchange allows many wonderful benefits, including a deferment on capital gains owed. But the standard 1031 takes place once the first property of yours is sold and then you purchase the replacement property.

For those who find the perfect investment replacement property, they want to act fast. After all, if it truly is a great deal, it may not be there once your property finally sells. So what do you do? You look into the 1031 reverse exchange. This is slightly more complicated than the traditional section 1031 exchange but it can still be accomplished.

Basically, you are allowed to purchase the new replacement property when the property you are selling is close to closing. You are then allowed to use the new property you own as the replacement property for the tax benefits. This may seem simple enough but there are in fact a few different versions of the 1031 reverse exchange. You will want to make sure that you are reviewing all of the different options in detail so that you are making the right decision for you.

There is the safe harbor reverse 1031 exchange, which is where the qualified intermediary controls the replacement investment property until the sale of the first property is completed. Within forty five days of taking on the new property, the investor must identify which property is being sold for the exchange. Then there is only one hundred and eighty days to close on the property being sold and for the entire transaction to be completed.

The traditional 1031 reverse exchange looks very much like the safe harbor exchange with the exception that the exchange is not able to be completed within the strict timelines. This type of reverse exchange requires much more documentation and paper work in order to make sure that there are no problems with the IRS or qualifying for the transaction all together. Even though there is a lot more to it, it is still considered to be a very valuable tool in making sure that you can make the most out of your time, money and investments.

There is also the improvement of construction reverse 1031 exchange. This allows the investor to set a piece of the property that will be built on, in the hands of the qualified intermediary. This is a very complex transaction than the traditional reverse exchange or the safe harbor exchange. You want to make sure that you are ready for any and all risks that come along with such an exchange. If you do not clearly understand all of the timelines and the rules regarding the reverse exchange, you could miss out on a big savings. You would have to pay on taxes now with money that you could have used for reinvestments. The more you invest, the larger your wealth will be.

And then there is the leasehold improvement reverse 1031 exchange, which is typically avoided because it has not yet been officially recognized by the IRS. Most people find that the complexities of this reverse exchange and the risk involved is purely not worth it. If you are looking into a reverse exchange, you want to stick with the safe harbor exchange or the traditional exchange.

Either way you look at it, you are going to deal with more documentation and guidelines than if you were doing a standard exchange. If the right property comes along though, you may feel as though you really have no other choice. You have to make sure that you are gaining the properties that are going to do the most for you later down the line. If this means that you are going to have to work within the rules and guidelines of the 1031 reverse exchange, then so be it. Just make sure that you completely understand the timelines and the restrictions. You might want to consider hiring a real estate attorney or using a service that can help you by walking you through the process.

If you want to make sure that you have all of the correct information, you might also want to research the exact definitions, rules and guidelines for the 1031 reverse exchange for yourself through the IRS website. The IRS website will have all of the information you need in order to understand, begin and complete a 1031 reverse exchange. The best thing to do is to make sure that you begin to learn all of the ins and outs of the reverse exchange now, before you have to make snap decisions. This way, you will have all of the knowledge needed to make the most informed decision possible.

The IRS Definition of an Exchange

If you have ever stumbled upon http://www.IRS.gov you have probably seen that there is a wealth of information on there. Some people find the site hard to navigate or simply find that some of the information is a little difficult to understand. If you are someone that is interested in real estate investments, it is vital that you make sure that you are fully aware of all the laws, restrictions and taxes that you have to face.

Of course, you already know that you have to pay taxes on the properties that you sell, but what about if you are exchanging a property or two? Believe it or not, there is an exchange program set up through the IRS that allows a person to take the proceeds from the sale of a property and invest it into a new investment property that is equal to or greater than the fair market value of the property that sold.

Section 1031 is where you want to focus for such benefits. The 1031 tax exchange is fairly simple to complete but there are a few things that you have to know in order to make sure that it is something that you are going to be able to take full advantage of. The IRS definition of this exchange is the exchange of qualified properties, which will defer the capital losses or gains that would typically be due upon the sale. There are two basic types of exchanges under the 1031 tax exchange regulations. There is the simultaneous exchange and then there is the delayed exchange.

The delayed exchange does seem to be the more typically used but the simultaneous exchange does have its place. The simultaneous exchange is where a property is accepted as “payment” from someone purchasing his or her property, in lieu of a cash payment. There are still value rules that have to be adhered to which are clearly defined on the IRS website. Typically though, real estate investors who are selling their property are not dealing with someone who has a property that they want to take on.

The delayed exchange is perfect for these cases. The investor can sell his or her property and then shop for another, from a third party. The investor has forty five days from the date of the sale to identify the property that he or she is interested in purchasing and using for the section 1031 exchange. To identify the property, the investor must submit his or her intentions to the Qualified Intermediary in writing. It is important to note that the forty five days does include weekends and holidays. If you miss the deadline, you miss out on the tax deferment. There are no exceptions granted under the 1031 tax exchange rules.

But the forty five day timeline is not the only timeline you face. Once you identify the property or properties that you want to purchase in the exchange, you have only one hundred and eighty days from the sale of your property to purchase the new ones. It is a good thing that you are allowed to identify up to three properties of interest since the timeline is so strict. Even if you are only interested in taking on one additional real estate investment property, you will have options if something falls through. If the property you identified falls through and you are not able to purchase it, then you are not able to take part in the 1031 exchange if your forty five day period is up. If you identified more than one property during that time frame, you will be able to simply try to purchase another one from your list. This means that you should have no problem taking full advantage of the tax deferment benefits that come from the section 1031 exchange.

It is also important to know that the Qualified Intermediary holds on to the proceeds from the property you sold until it is transferred over to purchase the new property or properties. You also have to make sure that the property or properties that you take on are of equal fair market value of the property that you sold. They can also be worth more than the property you sold, they just cannot be worth less, otherwise, and they will not qualify for the section 1031 exchange.

When dealing with the 1031 tax exchange for the first time, you might want to look around for a little outside help. The last thing you want to do is to miss out on the tax deferment. Having to pay on your capital gains now could mess up the plans you have to reinvest into some more investment properties. The more money you have to purchase new properties, the larger and quicker your overall wealth will grow. Sure, you will pay taxes when the time is right, but for right now, you can take advantage of section 1031 and build upon your wealth.

What Is A “Starker” Exchange And How Did It Get It’s Name?

Many people already know that there is a lot of money to be made in real estate investments. The thing is though, many people are a little shy about getting involved because of the amount of money that is required. Not only does a person have to have a little chunk of money to use as their start up, but there are also a lot of tax issues to deal with. Luckily, though, there is the starker exchange that can save you a lot of time, frustration and money. If you are planning to begin a real estate investing career, it is important to make sure that you are familiarizing yourself with the starker exchange so that you can make the most out of your investments.

Many people have heard about some tax breaks or deferments when selling and purchasing investment properties, but do not clearly understand how it all works. What most people would be referring to would be the 1031 starker exchange. This is not something that automatically happens for people. You have to qualify for the starker 1031 exchange as clearly stated on http://www.IRS.gov and make sure that you are meeting deadline qualifications.

If you want a brief understanding of how the exchange works, it is rather simple. There are two basic types of property exchanges, one that is immediate and one that is delayed. The delayed exchange, otherwise known as the starker exchange, is what most people look to take advantage of just because of convenience most times. The “starker” name came from the court case that established the rules and laws regarding this delayed exchange. It was in this court case that it was decided and a Qualified Intermediary has to be used which does come at a price. It is generally around five hundred dollars or less for the first time you have to use the Qualified Intermediary and less than that for each time thereafter.

But what is the purchase of the Qualified Intermediary? This is the person or company used to hold the proceeds of a sale until the seller takes possession of new property. It is an escrow account basically. This ensures that the proceeds from the sale of the property are truly being used towards the purchase of another real estate investment property and not something else. If the seller ay any point takes possession of any of the proceeds, the status of the tax deferral is then disallowed.

It is very important to note that there are very strict rules and guidelines that come with the 1031 starker exchange. Once you sell your property you have exactly forty five days to notify the Qualified Intermediary of the property that it is being exchanged for. This notification must be done in writing and it cannot happen after that forty five days. If too much time passes, you will find that you are no longer qualified for the 1031 starker exchange. There is no going back, no matter what the reason was for becoming late identifying or purchasing the new property or properties.

You also want to note that these forty five days includes holidays and weekends. So if your forty five days ends on a Saturday, you are not given until that following Monday. There are no exceptions or chances to bend the rules. And the forty five days rule is not the only timeline you will face when dealing with a starker exchange.

You actually only have one hundred and eighty days from the sale of the property you relinquished to completely purchase the replacement properties. If you run a hundred and ninety days, you are disqualified for the starker exchange on that set of properties. This means that you are faced with the taxes that you were trying to defer in the first place.

Another quick tip that might help you out is that your replacement for the property you sold can actually be more than one property. You just have to make sure that combined, they equal the value of the property you sold, if not more. There is the three property rule though which states that you can only identify up to three placement investment properties for the purpose of the exchange. For those who only want to purchase one, you still might want to identify at least two properties during that first forty five day deadline. This way, if the purchase of one property falls through the cracks, you will not be left empty handed and without a change at the 1031 starker exchange.

These guidelines are clearly laid out on the government’s website. Simply look into the Starker exchange and you will find all of the guidelines, rules and timelines laid out for you. All you have to do is do a little bit of research and you will find all of the information you need. Just make sure that you are learning everything there is to know about the 1031 starker before you sell that first property. Since you will be faced with strict timelines, you want to make sure that you are not wasting any time. Read everything you can on the starker exchange and consult a real estate attorney if you have to. After going through the process once, you should have no problems doing it again with little help.

What are Some of the Mandatory Time Frames And Rules For 1031 Exchange?

Those who are experienced real estate investors might already know all of the ins and outs of the 1031 rules. Those who are just getting started in investments or who are simply looking into their options may not yet understand all of the 1031 requirements that are needed to be fulfilled in order to gain the tax benefits that are sought after.

The first thing you want to do is to make sure that you are very familiar with all of the ins and outs of the 1031 requirements. By missing just one little fact, step, or piece of information, you could literally miss out on thousands of dollars. Wouldn’t you much rather that money be invested into another piece of real estate than given to the IRS right now? Of course, if you are not looking to reinvest in real estate, the requirements for the 1031 will not matter to you. If you want to build your wealth though, make sure that you are closely watching for the requirements.

To start, you have to have an investment property that you are selling. This is not a place where you are living, although you could have tenants in the property. Once the investment property sells, you have to name another property that you are purchasing in place of that one. The new property and the property you are selling have to be of “like kind”. This means that the value of the new investment property must be at least the same value of the property you are selling, if not more. In some cases, the new purchase can be of several different properties as long as they add up to be of “like kind” when it is all said and done.

You have exactly forty five days from the date that you sell your property to name the property or properties that you are using as the replacement. The 1031 rules clearly state that the forty five days is not negotiable, you cannot get an extension. There are no exceptions to this rule. You either comply with the rules or miss out on the tax benefits. One thing that seems to mess a lot of people up is that the forty five days does include weekends. It even includes holidays such as Christmas and Easter. So, make sure that you are counting down your forty five days exactly. You do not want to miss the deadline by even one day because you would not be able to take part in the 1031 exchange and you would miss out on the tax benefits.

Now, while you have forty five days to name the property that you want to use as the replacement, or the trade, you have only one hundred and eighty days from the date of the first sale to gain the replacement property or properties in your name. You want to make sure that you are taking your good old time with this. Those one hundred and eighty days can move pretty quick and a lot of things with the sale can go wrong or cause a delay. Also, if your IRS tax bill has a due date that comes before the one hundred and eighty days, you will have to go by that due date, which means you do not have as much time as you would have thought at first.

Make sure that you are not waiting until the very last minute for all of your transactions. Also make sure that you are looking over all of the 1031 rules and regulations. If you do not know what you are in for, you may miss some of the 1031 requirements and miss out on that tax delay. This could be the difference of getting another investment property or not getting one. It may seem like the 1031 requirements can go on and on forever, but once you really dive in there and start reading through everything; you will find that the 1031 rules are pretty straightforward.

As long as you are taking the time to read through all of the 1031 requirements, you will be just fine. If you find that the process begins to sound a little confusing for you, all you have to do is talk with your real estate attorney and he or she should be able to understand everything about the 1031 rules and requirements.

If you do not yet have a real estate attorney on retainer, you may want to consider getting one, even though you do not have to have one in order to take advantage of the 1031 exchange. You just never know when there will be additional tax breaks or deferments that you can take advantage of. The more you know and the more loopholes you take advantage of, the bigger and better your overall wealth will become.

What are the Qualified Property Types for a 1031 Exchange?

If you are already a real estate investor or you are looking to become one, you want to make sure that you are learning all the tips and tricks out there to make sure that you are using your money wisely. There is nothing worse than paying tens of thousands in taxes when you really do not have to at the moment. If there were better things that you could do with that money, wouldn’t you want to do it? With the 1031 exchange, you really do have a chance to make your money work for you, instead of having it work for the IRS. However, how is this possible?

With a 1031 property, you will be able to delay or defer taxes. This means that you can take the money that you would normally pay in taxes and apply that to the purchase of another investment property. But of course, as with anything else, there are some restrictions and guidelines that you will have to follow.

Once you read through them all, you should have no problem at all understanding just what it is exactly that you have to do. You want to make sure that you are looking carefully at two things such as the qualified property types and the timelines that you are working with. Even the most qualified property will not do you any good if you are not within the given timelines for the 1031 properties.

So just what is a 1031 property? To start with, it has to be an investment property. This is not a place you are calling “home”. This means that the property is used solely as an investment, a way for you to make money. Even though you cannot call it “home”, others can. This means that your qualified property could be a single or multi-family property that you have rented out, as an investment. The list of 1031 properties that qualify also include large apartment complexes that you own.

You have the 1031 property that you already own and that you are selling and then you have what is called the replacement property. This is what you are getting in exchange for selling the other property. This is not a trade between just two individuals or investors, although it can be. You can sell your first property to Mr. Smith and then purchase another property from Mr. Jones. It does not matter who is who, as long as the new property you are purchasing is valued at an amount that is equal to or greater than the property you are selling.

Even if the property is only valued at $30,000 more than the first, that is fine. In many cases, you can actually purchase several different 1031 properties that when combined, add up to be a value that is equal to or more than the value of the property you sold. This is a perfect option for those who want to diversify their portfolio and expand on their wealth.

Basically, you are improving your wealth by stepping up into a better investment. You have to use a third party to hold and transfer your money. You also have to use the equity gained in the property you sold to purchase the new property. Even though this may seem like you are not making out because you are walking away with tons of spendable cash in your hands, you real are. You will have increased your equity and your total estate worth. In the end when it comes down to it, you will have made a tremendous amount of money if you have been playing your cards right.

If you still find yourself confused about which properties are 1031 properties, you want to make sure that you are researching that information now. You do not want to wait until the very last minute. By doing this, you will find yourself in for a world of trouble because you just might miss out on the entire 1031 property exchange all together.

Within forty five days of the sale of your first property, you have to be able to name the property that you would like to purchase and include in your deal as a 1031 property. And then you only have one hundred and eighty days from then to make sure that the deal goes through. If your IRS taxes are coming up due sooner than one hundred and eighty days, that is the date you want to use as your due date for the 1031 property exchange.

Read up as much as you can about the 1031 property exchange so that you can make sure that you are getting the very best deal possible. Since the whole idea behind real estate investments is to make as much money as possible by spending as little as possible, this is a deal that you simply cannot afford to pass up. Go over all of the IRS guidelines for this tax deferment so that you are ready for anything that comes your way. The more prepared you are, the better luck you will have at getting the 1031 properties to work for you financially.

What are the Mechanics of a 1031 Exchange-How Does it Work?

If you have ever wondered just how it was that real estate investors can go from one property to another without looking as though they just paid thousands of dollars in taxes? The reason they are able to move from one property to the next is simply because they are taking advantage of a little known secret called the IRS 1031 exchange. Without taking advantage of this exchange, someone would have to pay the typical taxes on the sale of a property. Then, they would have to take what is left and try to invest in another property. This can be extremely hard to do but luckily, there is an easier way.

The 1031 exchanges are easy enough to understand, in terms of the basic concept. The basic concept is that the real estate investor is selling one property. Instead of paying taxes on that sale, the investor wants to purchase another investment property. The equity from the sale of the first property is used to invest in another property that is equal to or greater than the first in terms of value. When the money from the equity in the first home is used to purchase the second home, this is the 1031 exchange. Taxes are deferred. Wealth is built. Futures are secured.

As you can easily see, the basics, or the skeleton of the plan, is easy enough to understand. Understanding all of the rules, regulations, guidelines and timeframes is a little different. There are many things that could come up which could completely foil your plan to take advantage of the 1031 exchange. These are just simple little mistakes that could literally cost you thousands of dollars. To make sure that this is not something you are faced with, you want to make sure that you are studying the rules and guidelines of the 1031 exchanges as though you are studying for the bar exam.

The first thing you will want to realize is that there are very tight guidelines that are involved with the 1031 exchange. You want to make sure that you are extremely clear on what those guidelines involve so that you are not making any costly mistakes. You will quickly see that the timelines are the most important. The time lines for the 1031 exchange actually involve two parts.

When you first sell your investment property, you will have forty five days to identify the replacement property that you want to purchasing. This forty five days starts from the sale date and it is forty five days exactly. There are no extensions and certainly no exceptions. The holidays and weekend count as part of the forty five days so you are not just looking at business days when you are counting down.

Then, you only have a total of one hundred and eighty days from the date of the first sale to complete the acquisition of the second property. In some cases, if the investor’s IRS yearly tax due date is creeping up sooner than the one hundred and eighty days, the investor will only have until then to finish everything up. So whichever comes first, the one hundred and eighty days or the federal tax return due date, that is when everything must be wrapped up and completed in order to take advantage of the 1031 exchanges.

It is also important to make sure that you understand what types of properties qualify for the 1031 exchange and which properties do not. By making sure that you completely understand the rules for the 1031 exchanges before you jump in head first, you will ensure that your attempt at saving a substantial amount in tax money right now will be a success. You need to first realize that since the 1031 were built for the purpose of helping investors, the properties that you are selling and purchasing must be investment properties. These are not going to be properties that you live in. They can be rentals and properties that you are simply flipping.

The properties that qualify for the 1031 exchange also have to be “equals”. The property that you are purchasing must be of an equal value or greater than the one you sold. Basically, you want to make sure that you are “trading up” in order to qualify for the tax breaks that come from using the 1031 exchanges.

Since there is a lot that has to be done in a very little amount of time, it is important to make sure that you are getting as much help as possible. If you have a real estate attorney or an accountant, that is great. They will be able to help you through the process. Make sure that you are not leaving it all in the hands of those you have hired. You want to make sure that you are fully learning about the 1031 exchange so that you can make sure that everything is falling together nicely for you. Even though there are a few rules and regulations you have to deal with, the tax deferment advantage that you receive is well worth it. You can finally invest in the real estate that is going to set up your financial security for the future.

What are Some of the Tax Advantages of an Exchange?

What are Some of the Tax Advantages of an Exchange?

Have you ever wondered how those investors purchase property after property and never seem to flinch a bit? How are they able to make so many wise investments and sell so many properties? Are there secrets? Well, yes and no. It is not really a secret because it is knowledge perfectly laid out on the IRS website. The problem is though; many people have a hard time navigating through that site. Many people find the 1031 exchange too confusing to understand on their own. It is really quite simple though. By looking at the basics of the system, you will be able to easily see and understand how it works and just how exactly you can benefit from it.

Simply put, people are able to skip out on paying bulk taxes when they sell their investment property because they purchase another within a set time limit. Even though the parties involved may not actually be “swapping” properties, it is considered an exchange in the eyes of the IRS and therefore qualifies for capital gains avoidance or real estate tax deferral. This can easily save an investor thousands upon thousands of dollars. Instead of sending a heft check to the IRS, you are putting that money right into another property. This is securing your wealth and your future, instead of providing the IRS with more money. There will come a point where you will pay taxes, but with the help of the capital gains avoidance, that does not have to be for a long time to come.

It is important to point out a few things first. To start with, the new property has to be valued at the same or higher than the property that sold. All of the equity gained from the one property will be directly invested into a new property. This is how smart investors are able to grow their wealth without paying all of the taxes right away. But just how can the IRS afford to grant the capital gains avoidance or the real estate tax deferral? Aren’t they missing out on a lot of tax money?

Even though there is the wonderful 1031 exchange that gives investors the capital gains avoidance, there are always going to be those who do not make it for various reasons. Some investors find that they are not able to identify a replacement investment property in time. Investors have forty five days from the date of the sale of the first property to name the property that will be its replacement. Then there is a timeline to finish the transaction of acquiring that property in order to qualify for the real estate tax deferral.

There are also some people who would just rather not reinvest into any properties. They want to simply cash out and move on with their lives. Not everyone invests in revolving real estate for the rest of his or her lives. Then there are those investors who do not know any better and they simply reinvest their money into a another property, missing out on the real estate tax deferral, all because no one mentioned to them about the 1031 exchange. As you can clearly see, there are always going to be property sales that will pay out hefty sums of money to the IRS for taxes.

In order to take full advantage of the 1031 exchange and the capital gains avoidance, you want to make sure that you are learning everything there is to know about the rules. You could easily mess up your chance to save thousands of dollars in taxes if you simply try to go about this process on your own. After a few times going through the 1031 exchange, you might be able to complete everything on your own. Until then though, you want to make sure that you are getting some help, even if it costs you a little. It is still better than not having the real estate tax deferral.

The deadlines are extremely strict. This means that you have to move fast and you have to be on the ball. If you miss a step, you could miss out on thousands of dollars. The cut off dates include weekends and holidays. Take this into consideration when looking at the time frame you have to get everything in order. The more prepared you are, the smoother everything will run. This is why so many people do search for some outside help when dealing with their first 1031 exchange. You want this to be the positive experience you know it is.

You also need to make sure that the properties are well qualified and will be considered a match for the real estate tax deferral or the capital gains avoidance. The more you go through the process and the more properties you invest in, the better you will get at understanding the 1031 exchange and all of the rules and regulations that go with it. Once you see how much money you saved the first time you use the exchange, you will want to make sure that you are repeating the same steps each time you sell another property. Expand your wealth and set up a secure future for you and your loved ones easily with the help of the IRS 1031 exchange.

What is a 1031 Exchange?

Many people already know that they want to get involved in the real estate market in one way or another; they just do not know where to begin. Before anyone invests in real estate, it is important to make sure that all of the laws and tax implications are studied. If you want to get involved in the real estate market, buying and selling homes, you want to make sure that you are learning everything there is to learn. Instead of learning about all of the hints, tips and tricks as you go along, learn them know so that you can make the most money possible.

Many have heard about the 1031 exchange when real estate topics come up. Most people do not understand exactly what the 1031 rules are, except that it has something to do with the IRS. The IRS 1031 is something that you want to get yourself familiar with. If you find that it is a little confusing to understand at first, you may have to go over the information a few times. In reality, it is not a hard concept to get, but it may take a few glances over the 1031 tax regulations to understand them fully, especially if you are getting you information straight from the IRS site. This site tends to scare some people off because of the terms used.

To put it simply though, the 1031 is a strategy that is used when you are selling one property and proceeding with the acquisition of another piece of property within a certain time frame from one another. Each property must qualify for the 1031 though so that is something you have to check into each time you want to take advantage of this great benefit. Again, it may at first seem like a lot of hassle but in the end there are great rewards. The 1031 rules are there for everyone to see so that they can be taken advantage of. If you do not take advantage of what the 1031 exchange has to offer, you are certainly going to find yourself missing out.

Even if the selling and the buying of properties, happens on different days, the 1031 exchange, acts just as that, an “exchange” of properties. What does this mean to the average investor? It might just mean thousands of dollars in savings! Property exchanges through the 1031 are not taxable while sales are. This means that you do not have to pay certain taxes on a property you sold because you are “trading” or “exchanging” properties.

So, what properties can qualify for the exchange? Any “like kind” properties are considered enough to qualify for the 1031 exchange. You also want to make sure that you clearly understand all of the rules of the 1031 exchange in order to gain the most benefits from it. It is up to you to identify a property, or properties, that you wish to be considered as a replacement. You have exactly forty five days from the date of the sale of your property to identify the replacement properties. This is forty five days exactly. Even if the cut off lands on a weekend or a holiday, it is the cutoff, there are no exceptions.

After you identify the replacement property, under the 1031 exchange rule, you have one hundred and eighty days to physically receive the new property or else you no long qualify. These one hundred and eight days begins to count as soon as you relinquish the first property. Even if the end date lands on a holiday or a weekend, the end date does not change. There are cases where the deadline for this exchange is sooner. If the due date for the tax return is due prior to the one hundred and eighty days, the due date changes. Whichever situation happens first, that is when everything is due.

For someone looking to save thousands of dollars, taking advantage of the 1031 tax regulations is the way to go. Whether this would be the first and last time you would find yourself in this situation or you plan on dealing with many sales and purchases of properties, you want to make sure that you are doing your best to learn all of the 1031 rules for yourself. You just never know when the information will come in handy in the future.

Even if you hire a real estate attorney or an accountant, you still want to make sure that you completely understand the IRS 1031 exchange. Even though you have some people working for you, it is ultimately up to you to make sure that you are saving the most money possible. The more money you save, the more real estate you can invest in. Look up the technical information and take advantage of advice you receive from professional investors in the field. A few minutes of your day can save you thousands of dollars. It is certainly worth that much time to you.