Real Estate: October 2007 Archives
Aside
from the implementation of your actual business strategy, there is
nothing more important than being aware of, and utilizing, one of the
greatest provisions of the Internal Revenue Code -- the 1031 exchange.
The 1031 exchange, named, intuitively, after its provision in the Code
itself, allows for the deferral
of income tax on gains from property held for investment purposes by
allowing those gains to be exchanged for similar (“like kind”)
investment properties. I highlight “deferred” because it doesn’t allow
an investor to avoid tax on the gains, but it allows tax on those gains to be deferred
for as long as they are being held in a qualifying property. The great
part about the 1031 exchange is that you can use it over and over
again, as many times as you want. Therefore, you can defer taxes on
your gains theoretically for your entire life. There’s also the
potential, with some creative tax planning from your accountant, to
never have to pay these deferred taxes, if you set it up in a way to
pass it on to your children or even a charity (don’t quote me on this
-- definitely check with your accountant on this one). Either way, the
1031 exchange is the single greatest gift the government has ever
handed real estate investors. So, let’s see how it works:
Continue reading How to Delay Paying Taxes on your Real Estate Profits: the 1031 Exchange.
Congratulations to Stewart Hsu, at stewarthsu.com,
the winner of the October 17 article submission contest!! The article
offers some very good advice on the beginning stages of real estate
investing. His article, “How to Get Started Investing in Real Estate,”
is featured in full below. Enjoy!
Continue reading How to Get Started Investing in Real Estate.
