Finance: Preserve Equity, Build for the Future Using a 1031 Tax Exchange

Preserve Equity, Build for the Future Using a 1031 Tax Exchange

Written by Neda Dabestani-Ryba

Preserve Equity, Build for repparttar

Future Using a 1031 Tax Exchange By Neda Dabestani-Ryba

Thinking of trading up on an investment resort property? If so, look into 1031 Tax Exchanges (based on IRS Code Section 1031), which allow taxpayers to defer taxes on capital gains resulting from repparttar 150448 sale of investment real estate, often a sizable sum since combined Federal and State taxes can run as high as 38 percent. With an exchange, owners are able to preserve equity, while still selling repparttar 150449 property. The underlying concept is that an exchange of like-kind property for like-kind property does not generate funds, which can be taxed since repparttar 150450 profits go directly into repparttar 150451 new or replacement property. To accomplish this, sellers hire a Qualified 1031 Intermediary (QI) to document repparttar 150452 sale as an exchange and to receive repparttar 150453 funds from repparttar 150454 sale. The QI then delivers repparttar 150455 funds directly to repparttar 150456 closing agent for repparttar 150457 replacement property who deeds repparttar 150458 property to repparttar 150459 taxpayer. Central to a 1031 Exchange is repparttar 150460 interpretation of like-kind property. While repparttar 150461 common assumption is that like-kind implies land for land or a condominium for a condominium swap, repparttar 150462 interpretation of like kind is actually less literal. Rather, it defines like kind as meaning that both repparttar 150463 replacement and repparttar 150464 original property must be used as an investment. So land, condominiums, single-family homes and motels can all be exchanged for one another as long as they are used in repparttar 150465 exchanger's business or held as an investment. The amount of debt held on repparttar 150466 replacement property must be repparttar 150467 same as repparttar 150468 amount of debt on repparttar 150469 original.

How to Eliminate Risk in Real Estate Investment

Written by Neda Dabestani-Ryba

How to Eliminate Risk in Real Estate Investment

By Neda Dabestani-Ryba Prudential Carruthers REALTORS

Avoid 12 Common Mistakes Made by Novice Investors and Ensure High Rates of Return!

Real estate investment has provided many investors with positive cash flow, tax benefits and satisfaction of making an impact in others lives. Like any investment however, real estate has intricate nuances and market trends that when ignored can cause an investor tremendous heart ache.

Unbelievably many first time investors are willing to part with their hard earned cash without taking repparttar time to study their investment. They rely on traditional trends and gut feelings. Before you risk your investment take repparttar 150447 time to learn all you can about your market. By aligning yourself with repparttar 150448 right professional you can avoid these 12 common mistakes and you’ll ensure an excellent return on your investment.

1. Failure to Determine Your Time Need - Cash flow, capital appreciation, tax benefits, loss of management, equity paydown and pride of ownership are just some of repparttar 150449 things that need to be addressed before you make that investment. A service minded real estate professional can be a tremendous asset by taking repparttar 150450 time to evaluate your needs and making sure you’ve got all your bases covered.

2. Not Checking out repparttar 150451 Seller or Sellers Agents Numbers - Claims of extremely high rates of return run rampant in real estate investment. Don’t get caught up in repparttar 150452 excitement - check everything: rents, payment history, taxes, expenses, deposits, future modifications... everything. Make sure you have repparttar 150453 right agent...it’s like having a good insurance policy against overlooking all repparttar 150454 seemingly insignificant but very important details.

3. Forgetting You Are Buying a Business - Owning investment property carries with it a great potential for creating wealth and... some potentially difficult decisions. Evictions, re-investment into repparttar 150455 property and time management all need careful consideration. Remember this is not a ‘hands off’ business.

4. Avoid Negative Cash Flow - Property that eats cash every month can drain your working capital. This can create stress, frustration and become quite painful. Predicting constant appreciation is extremely difficult if not impossible for repparttar 150456 unseasoned investor. A strain on your cash flow may cause you to sell repparttar 150457 investment before repparttar 150458 benefits of ownership are ever realized.

5. Failure to do a Thorough Inspection - Look under every rock! Hire a professional inspector. Ask repparttar 150459 tenants about pest problems, structural damage or reoccurring problems. Don’t overlook anything! A value driven real estate professional will help you find repparttar 150460 right inspector and can help you avoid costly mistakes. When investing your hard earned money be sure and use sound business judgment!

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