Capital Gains on Property Sales

By using by a 1031 Exchange when you sell real property you can avoid a 25% capital gain tax by doing a 1031 Exchange. You will have a maximum of 45 days after escrow closes to “identify” potential replacement properties. You can identify a total of three or, alternatively, as many as you want, but the total value may not exceed 2X your 1031 funds with Accommodator.

All tax basis will be allocated to the funds to be reinvested via 1031, so any funds taken as cash will be fully taxable at Federal capital gains and State ordinary income rates — a total approaching 25%, though perhaps the state taxes are a deduction against Federal taxes, which may bring the effective rate more into the 22% range.

Accommodator in 1031s , You will have a maximum of 45 days after escrow closes to “identify” potential replacement properties. You can identify a total of three or, alternatively, as many as he wants but the total value may not exceed 2X his 1031 funds with Accommodator.

Leveraging 1031 Monies. You leverage 1031 monies by adding loan monies to the 1031 monies. The leveraging with mortgage money will serve to give you significant tax basis to depreciate, sheltering some money.

1031 Exchange Deadline. If you just sold real property and want to do a 1031 exchange to avoid capital gain, you are at the “now or never” stage to elect for funds to go to a 1031 Accommodator.

A Delaware Series LLC (SLLC) allows for sub companies or series where each series is treated as a separate entity. That means the liabilities of one series cannot be enforced against another series of the LLC, or against the LLC as a whole. As an example of how this could be used, real estate investors may find these useful in setting up separate series for particular real estate holdings. The concept is similar to that of a segregated portfolio company or a protected cell company. However, California does not recognize SLLCs.

By | 2018-08-19T19:26:25+00:00 March 15th, 2017|Categories: Real Property|

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