Category Archives: Taxes

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 – 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…

Capital Gains Versus a 1031 Exchange

1031 Exchanges

This is part four in my series on 1031 exchanges.  Keep in mind that I’m using the current capital gains rate of 15%.  Depending what happens on November 6th, these number may change … radically. See attached for calculations One of the primary advantages of a 1031 exchange is not just the tax savings, but…

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…

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…

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…

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…

Columbus / Central Ohio Owners – Property Tax Appeals Due March 31st

This is the last reminder because valuation appeals are accepted from December to March 31.  Your chances of winning are about half so it’s well worth doing, but must be done correctly and very soon.  It’s the 27th so get moving.   Lock your new, hopefully lower, valuation in for three years. Take a look at the…

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,…

Columbus – Central Ohio Owners – Property Tax Appeals Due March 31st

Just a reminder.  Valuation appeals are accepted from December to March 31.  Your chances of winning are about 50 – 50 so it’s well worth doing, but must be done correctly.   Lock your new, hopefully lower, valuation in the for three years. Take a look at the short article at the link. Columbus Realtors.com – News…

Columbus – Central Ohio Readers – Property Tax Appeals

Valuation appeals are accepted from December to March 31.  Your chances of winning are about 50 – 50 so it’s well worth doing, but must be done correctly.   Take a look at the short article at the link Columbus Realtors.com – News – Property Tax Appeals

Triple Net Leases – Property Tax Reimbursement

I few posts ago I promised that I would go into greater detail regarding aspects of a commercial lease that the prospective buyer needs to examine carefully.   Without the underlying leases the property is worth replacement costs and comps of similar vacant property.   Given that the cash flow of the leases in place is what…

IRS – $25,000 Passive Activity Loss Limit on Rental Property

1031 Exchanges

Linked is a US Tax Court case ruling that came down earlier this year that emphasizes the 750 + hour per year active management requirement and documentation required.  Also Discussed in the IRC 469 document is the $25,000 special passive activity loss allowance. Now that were little more than a month from year end, it’s…

IRS 1031 Exchanges from Fee Simple into Leasehold Interests

1031 Exchanges

Given that fee simple, single tenant, single parcel, national credit, long corporate triple net or absolute net leased retail opportunities are as hot as they are for 1031 exchanges, buyers are looking at alternatives such as purchasing leasehold interests or a fee simple ground lease.  I’ll cover leasehold interests in this post and get into…

Commercial Property Owners Exempted from Proposed lease Accounting Rules

This is an informational post for landlords and property owners brought to our attention by Randyl Drummer at CoStar News.  Commercial real estate owners and landlords have been excluded from proposed accounting standards changes to require capitalizing real estate and equipment leases on their balance sheets.  The International Accounting Standards Board (IASB) and the U.S.-based…