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.
All investors, buyers, sellers and second home owners need to consider the unique tax laws and the opportunities that this economy offers to them. Currently, I would consider the following strategies when investing in Southwest Florida.
- Price – While the economy bounces around at bottom, this in an excellent chance to shop and find the right property at an excellent price.
- Capital Gains – The future of capital gains is in complete flux. Congress and the President continue to waver on the future of our tax laws. The current long term capital gains rate is 15%. If no changes are made to the law, the minimum rate will be 20% and could be as high as 28%.
- Sellers need to seriously consider selling this year to take advantage of the lower tax rates or consider a 1031 Exchange. A 1031 Exchange will allow a real estate investor to sell their current property and roll the profits into a new property as long as it is of equal value. This allows one to “swap” the property. You could use this to upgrade to a larger house or condo or go to a more advantageous cash flow property.
- Did you know you can buy real estate in your IRA? Self-Directed IRAs allow you to purchase investment real estate in your IRA. The real estate cannot be used for personal use. If you think that price is right and specific properties will appreciate, a real estate IRA can allow you to defer or eliminate all gains by completing the transaction inside the IRA. I have written a free book on real estate IRAs at www.daveowens.com if you would like to learn more.
- Consider Tenants in Common – Did you know that you can purchase real estate with a group of investors, and each person will own a percentage of the deed. I know of a transaction recently on-island where a group of Fort Myers Physicians purchased a home. They have decided to use the home for several weeks each year and rent the remaining weeks.
Planning for real estate investing is hard work but rarely have we seen the opportunities that exist as in today’s market. If you are considering real estate investing, sit down and look at your goals and then consult your team of experts to see what is available. The old Nike saying has never been more true – “Just Do It!”
Dave Owens, CPA, CES is the managing Member of Entrust Freedom, LLC. Dave has been in business since 1997. Entrust has an arsenal of tax free strategies, feel free to contact Dave for more information or questions at 239-333-1031 or owens66@entrustfreedom.com.