|
Article source: http://www.my-credit-report.info/. Used with authors permission.
Does the stress of monthly rent collection and after hour plumbing problems make you feel like a performing seal at the circus? Youre trying to keep a spinning beach ball balanced on your nose, at the same time that youre wildly clapping your flippers together hoping to please an unappreciative audience.
Does thinking about selling your investment property make you feel like Bozo the clown? Having to paint on a happy smiley face when thinking about the large percentage of your profits that youre going to lose to capital gains tax makes you frown?
There is a way to move on and leave the circus behind.
Its called a 1031/Tenant In Common (TIC) Exchange. This kind of deferred capital gains tax investment is an attractive option for owners of investment property who are looking to get a return on their equity without having nearly 30% of their profits swallowed by capital gains tax.
Under the regulations of the 1031/TIC Exchange program, an investment property owner can exchange their current commercial property for a like-kind investment property of equal or greater value, deferring the payment of capital gains taxes and maximizing their profits.
A relatively new tax program, the 1031/TIC Exchange program wasnt sanctioned by the IRS until 2002. Many commercial property owners who might qualify for the 1031 deferred tax program dont know that its a viable option available to them.
Qualified investment property owners will discover that there are other benefits to the 1031/TIC Tax Deferred Exchange program. Youll have a monthly income stream from your investment property, without the hassles that go along with being a hands-on landlord. And your new 1031/TIC Exchange investment property will pass directly to your heirs at the stepped up basis (according to current tax law). Your beneficiaries wont have to pay capital gains tax.
There are three very important elements of the 1031/TIC deferred tax transaction that every investment property owner should know:
* Youll need an unbiased third party qualified intermediary, perhaps a lawyer or qualified CPA, who will handle all of the paperwork and make sure the IRS guidelines are followed.
* Youll need to work with a quality 1031 Sponsor Company with a continuous inventory of grade A commercial real estate.
* Youll need to make sure that your new commercial investment is well maintained and serviced by a reliable property management company with a great track record and years of experience.
The 1031/TIC Exchange transaction can be a bit complicated for the novice. Attempting it without the guidance of a professional financial advisor, who specializes in this kind of deferred capital gains tax program, could lead to some unexpected and unsatisfactory results.
You could find yourself involved with a 1031/TIC sponsor company that handles poor quality real estate investments that may need work have little appreciation potential. They may have high tenant turn-over and require constant maintenance. Youll need to make sure the 1031/TIC sponsor company youre working with handles only quality real estate. This is often high end office space leased to long-term corporate clients.
You also want to avoid working with an unreliable property management company. Poorly managed properties make owners of 1031/TIC investment properties the targets of lawsuits from unhappy tenants, and may lead to eventual loss of equity as the building depreciates instead of increasing in value.
You cant use a family attorney or CPA to generate the paperwork necessary for the 1031/TIC exchange. You need to find an unbiased third party who is experienced with this capital gains tax deferment transaction. There are many deadlines that must be adhered to when youre making this kind of property exchange. If they are not met, youll find yourself paying those capital taxes out of your own pocket, despite your good intentions.
There is a way for you to get out of the circus ring and into the audience enjoying the performance.
For investment property owners who are interested in the 1031/TIC Exchange program, working with an experienced financial advisor is the only way to avoid all of the pitfalls of this complicated transaction. How much would you pay to save thousands in Capital GainsTax? Ill teach you for free in a Teleconference that may change your life. Sign up at ==>Defer Capital Gains Tax
|
