Advanta IRA Trust – Real Estate IRAs

At first glance, the idea of increasing the Capital Gains rate seems like a bad thing.  How could increasing tax rates ever be a good thing?  Well, for all of us Qualified Intermediaries, this is means potentially more business for us.  For those of you Realtors out there who are familiar with 1031 exchanges, this could be your golden opportunity.  For those who are a little hazy on what exactly a 1031 exchange is, allow me to give you a brief synopsis.  1031 is a section of the tax code that states if you sell investment real estate and purchase investment real estate of equal or greater value, you defer not only all capital gains, but any applicable depreciation recapture and state taxes.  This is a key point to note.  You will often hear people say, “I’m just going to cash out, pay my 15% and be done with it.”  That may or may not be the case.  Sometimes they are looking at paying substantially more than 15%. Read the rest of this entry »

Savvy Sanibel and Captiva real estate investors are always looking for deals, and now may be the best time.  The Golden Rule of real estate investing has not changed – the profit is made by purchasing at the right price and not over paying.  The rule on Sanibel and Captiva has never been truer.  For buyers getting property at the right price, the tax laws have never been more favorable. Read the rest of this entry »

Real Estate Investors have a unique tool in their arsenal that other types of investors do not.  One of the oldest tax code sections is 1031.  This secret weapon is called a 1031 exchange.  It is one of the few areas of the tax code where the US Government allows taxpayers to sell an asset and not immediately pay the taxes.  Even State taxes are deferred.  The way a 1031 Exchange works is simple.  If you sell piece(s) of investment real estate, and you are want to buy of another piece(s) of investment real estate of equal value, you can defer indefinitely all taxes (capital gains (15%), recapture tax (25%) and state income tax). This is the benefit: by not having to pay those taxes, you can keep your money (instead of giving it to Uncle Sam) and smartly reinvest it for yourself to grow your real estate portfolio.  1031 is a free financial tool that let you keep 15-30% of taxes you would have had to pay.  In the world of increasing taxes, 1031 is a viable alternative. Read the rest of this entry »

Now that the sales of Real Estate have ticked up, the question becomes can I 1031 Exchange new properties held less than one year?  The big question the IRS asks is intent.  What was your intent with the property and do you intend to make this a long term hold?  Unfortunately for us, the IRS does not tell us exactly how long to hold a property to qualify for 1031 exchange treatment. The one thing the IRS does tell us is that they do not like property to be exchange if it was held for resale.  So basically they are saying if you buy a piece of property and you put a sign up in the front yard, this will not qualify and then you buy another property and flip that one. Read the rest of this entry »