As part of their quarterly goal process, Entrust Freedom set a new goal last quarter based on client compliments. For this past quarter, the goal was to score at least 15 in the category of Client Service. For every compliment we received from a client or colleague, Entrust would give itself 1 point. For every [...]
Section 1031 is a valuable tax tool for the real estate investor’s toolbox. Prior to recent rulings, an investor could purchase an investment property, rent it out for a few years, and then convert the property to their primary home. Should they decide to sell it after the 5 year minimum holding period, they could [...]
Until recent rulings, it has been difficult to determine what the IRS expects when it comes to Vacation homes and how they are treated in the context of the 1031 exchange. Thanks to Revenue Procedure 2008-16 and Moore v. Commissioner, we now have clear guidelines as what would qualify and what would not. In order [...]
Under the current law, a reverse 1031 exchange can be accomplished by following Revenue Procedure 2000-37. Under this technique, the Exchangor or Client typically purchases their replacement property before they have secured a buyer for their exiting property, and parks title to the replacement property with an Exchange Accommodation Titleholder (EAT). Most Qualified Intermediaries also [...]
Whenever I tell someone that we are a Qualified Intermediary for 1031 Exchanges, I almost always get the response “1031?! Are people still doing those? I didn’t think those were still being done in this economy.”
Answer: Timing is everything!
The short answer to this question is yes, BUT you need to make sure that you treat the property as investment property first before you even think about converting it to your primary home.
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%.
Short sales and foreclosures are one of the hot topics that industry professionals and investors like to talk about. Even considering what a good deal they are, one would wonder who would be interested in buying a property that is in need of major rehab or could take up to six months to close.