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

Written by Neda Dabestani-Ryba


Preserve Equity, Build forrepparttar 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 fromrepparttar 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 sellingrepparttar 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 sincerepparttar 150450 profits go directly intorepparttar 150451 new or replacement property. To accomplish this, sellers hire a Qualified 1031 Intermediary (QI) to documentrepparttar 150452 sale as an exchange and to receiverepparttar 150453 funds fromrepparttar 150454 sale. The QI then deliversrepparttar 150455 funds directly torepparttar 150456 closing agent forrepparttar 150457 replacement property who deedsrepparttar 150458 property torepparttar 150459 taxpayer. Central to a 1031 Exchange isrepparttar 150460 interpretation of like-kind property. Whilerepparttar 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 bothrepparttar 150463 replacement andrepparttar 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 inrepparttar 150465 exchanger's business or held as an investment. The amount of debt held onrepparttar 150466 replacement property must berepparttar 150467 same asrepparttar 150468 amount of debt onrepparttar 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 takingrepparttar time to study their investment. They rely on traditional trends and gut feelings. Before you risk your investment takerepparttar 150447 time to learn all you can about your market. By aligning yourself withrepparttar 150448 right professional you can avoid these 12 common mistakes and youíll 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 ofrepparttar 150449 things that need to be addressed before you make that investment. A service minded real estate professional can be a tremendous asset by takingrepparttar 150450 time to evaluate your needs and making sure youíve got all your bases covered.

2. Not Checking outrepparttar 150451 Seller or Sellers Agents Numbers - Claims of extremely high rates of return run rampant in real estate investment. Donít get caught up inrepparttar 150452 excitement - check everything: rents, payment history, taxes, expenses, deposits, future modifications... everything. Make sure you haverepparttar 150453 right agent...itís like having a good insurance policy against overlooking allrepparttar 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 intorepparttar 150455 property and time management all need careful consideration. Remember this is not a Ďhands offí 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 forrepparttar 150456 unseasoned investor. A strain on your cash flow may cause you to sellrepparttar 150457 investment beforerepparttar 150458 benefits of ownership are ever realized.

5. Failure to do a Thorough Inspection - Look under every rock! Hire a professional inspector. Askrepparttar 150459 tenants about pest problems, structural damage or reoccurring problems. Donít overlook anything! A value driven real estate professional will help you findrepparttar 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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