Tag Archive: IRS

Client Need for Net Leased Retail – 1031 exchange – 45 Identification Period

IRS 1031 Exchanger in 45 Identification period looking for $3.5 to $5 million, national credit, preferably single tenant, NNN, triple net retail with at least seven unexpired years left on net lease.  Prefer absolute net.  No gas or 7 Eleven.  Fast food and fast casual fine if corporate lease or large franchise. Looking West Los…

1031 Exchange Rules

Rule # 1 Both the relinquished property and replacement property must be held for investment purposes or used in a business and be ‘like kind’. Rule # 2 The IRS requires the investor to identify the replacement property or properties within the 45 day ‘identification period’. The identification period begins the day of closing of the…

IRS Section 1031 Exchange Basics

Since we’re getting into tax season, I’m getting more calls over the last few days regarding the basics of a 1031 delayed or reverse exchange so I thought it best to review some of the most important aspects of  a 1031. This allows investors to use all of the sale proceeds to leverage into more valuable…

1031 Exchanges and the 3.8% Net Investment Tax – IRS Section 1411 regs

1031 tax deferred exchanges under IRS section 1031 of the Internal Revenue Code allow real estate investors to defer taxes that would be due if the property was sold instead of exchanged. If the investor decides not to participate in a 1031 exchange, the taxes potentially and likely owed would include the following: A) depreciation…

1031 Exchange – Due Diligence Selecting a Qualified Intermediary

I haven’t written much about 1031s over the last year or so, but given the 50% increase in capital gains taxes in many circumstances and the 3.8% Net Investment Tax, there’s been a 50% increase in 1031 exchanges over the last year.  I think the number would be even higher if it weren’t the fact…

1031 Exchanges and Fair Market Rent

A U.S. Tax Court decision from earlier this year, Adams v. Commissioner, T.C. Memo 2013-7, illustrates the importance of the investor / tax payer receiving a fair market rent for their investment property.  In the above case the tax payer exchanged into a replacement property that was rented at slightly below market rents to the…

1031 Exchanges – October 18 to December 31 2012

This is review and reminder to a post earlier in the year. A 1031 exchanger must complete the acquisition of a replacement property in a 1031 exchange before midnight on the earlier of the 180th day after the date the relinquished property was transferred, or the due date (including extensions) for the income tax return for…

IRS Issues Proposed Regs on 3.8% Medicare Tax on Net Investment Income

The IRS has issued Proposed Regulations, REG-130507-11, regarding the new 3.8% Medicare tax on net investment income imposed by IRS Section 1411. The proposed regulations affect individuals, estates and trusts.

FASB / IASB New Accounting Rules on Lease Expenses

Randyl Drummer from CoStar News reported that after months of negotiations the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) agreed on accounting rules regarding how companies should account for lease expenses on their balance sheets by agreeing on two methods instead of one unified approach. The two boards have agreed that…

1031 Exchange Tax Court Case

1031 Exchanges

There’s a relatively new U. S. Tax Court case Reesink v. Commissioner, (April 23, 2012) T.C. Memo 2012-118, that could be of interest regarding a 1031 exchange. The Reesinks, husband and wife, purchased a residential residence for investment purposes to use as a residential rental. The Reesinks after much effort over a period of eight…

Why Do a 1031 Exchange?

1031 Exchanges

Unfortunately, we may have a much better reason in a few months to do a 1031 exchange when and if the Bush tax cuts expire.  However, there will likely be folks who decide to cash out and sell before the new rates take effect.  Frankly, that make a bunch of sense if the new rates…

1031 Exchange Basics

1031 Exchanges

This allows investors to use all of the sale proceeds to leverage into more valuable real estate, increase cash flow, diversify into other properties, reduce management or consolidate holdings.  And notice that I wrote “all of the sales proceeds”.  If that rule is not followed, then you would have tp pay ‘boot’ on the proceeds…

Your Capital Gains Taxes Versus a 1031 Exchange

This is part four in my series on 1031 exchanges.  Keep in mind that I’m using the 2014 rules for the calculation. If the tax payer falls within the 10% or 15% marginal income tax brackets, then the long-term capital gains tax rate is 0%. the 25%, 28%, 33%, or 35% marginal income tax brackets,…

1031 Exchange Basics

This allows investors to use all of the sale proceeds to leverage into more valuable real estate, increase cash flow, diversify into other properties, reduce management or consolidate holdings.  And notice that I wrote “all of the sales proceeds”.  If that rule is not followed, then you would have tp pay ‘boot’ on the proceeds…

Introduction to 1031 Exchanges

1031 Exchanges

I’m going to create a series of posts on 1031 exchanges over the next couple of month from the basics, starting with this post to the more complex. First of course is the disclaimer:  always seek professional help through your tax attorney and/or CPA before and during an exchange.  I am a commercial real estate professional…

Introduction to 1031 delayed Exchanges

I’m going to create a series of posts on 1031 over the next couple of month from the basics, starting with this post to the more complex. First of course is the disclaimer:  always seek professional help through your tax attorney and/or CPA before and during an exchange.  I am a commercial real estate professional…

Possible Capital Gains Tax Rate Changes for 2013

Given that election time is but six months away, I’m hearing a bunch of ‘what if’ discussion from clients, friends and other commercial brokers regarding potential tax ramifications with the Bowles – Simpson Plan, the Ryan Plan and the Buffet Rule and the ramifications if you choose not to do a 1031 exchange. I don’t…

1031 Exchanges

I’ll roll this one out over a period of several months, but it will be as thorough as a series on 1031 exchanges as I can do. I have the first four segments done.  I have no idea how many total I will have … maybe 20 or so.  Sign up on my RSS feed…

Dividend Tax Hike Coming for 2013

As many of us are aware, unless congress takes action, the top tax rate of dividends will increase from the current 15% to 43.4% next year.   That’s a top ordinary income rate of 39.5% plus the 3.8% on investment income as part of Obamacare passed in 2009.  Another good reason for commercial real estate and…

IRS Dirty Dozen Scams for 2012

http://www.irs.gov/newsroom/article/0,,id=254383,00.html It’s that time of the year again.  This one is scary.  It’s bad enough having your identity stolen let alone have the perp file a fake tax return and claim and receive a refund check. Identity Theft Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns,…