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Investment Basics
Boot Exchanges
Having nothing at all to do with footwear,Boot is a term which refers to the items of personal property and/or cash that is necessary to even out an exchange. Boot is property which is received in an exchange and that is not like kind as to other property acquired in an exchange transaction.
Investment Basics
Closing Costs
Exchangers, closing agents, escrow officers and tax advisors have struggled with the many issues presented by the variety of expenses and cash payments associated with closing the properties in an exchange transaction.
Investment Basics
Converting a principal residence to a rental property and later sell it and benefit from both IRC 121, IRC 1031
REVENUE PROCEDURE 2005-14
A property owner can convert a principal residence to a rental property and later sell it and benefit from both IRC 121 (principal residence tax exclusion rules) and IRC 1031 (investment property tax deferred exchange rules). Property owners must comply with all the rules in both sections to qualify.
Investment Basics
Delayed Exchange Deadline
The Delayed Exchange
There is a common misconception that all tax deferred exchanges are complicated and require all properties, relinquished and replacement, to close concurrently. Fortunately, the most common exchange variation, the delayed exchange (also referred to as a deferred or Starker exchange, Starker v. U.S., 602 F.2d 1341),
Investment Basics
DisQualified Parties and Legal Counsel as Accommodator
Your Attorney as Accommodator...Why this can Jeopardize the Exchange!
Investment Basics
Do's and Don'ts 1031 Exchanges
Do advanced planning for the exchange. Talk to your accountant, attorney, broker, lender and Qualified Intermediary. If you miss your identification and exchange deadlines. you will disqualify the entire exchange. No Exceptions period!
Investment Basics
Exchanging With a Related Party
Exchanges between related parties are allowed but the Exchanger must follow specific rules before the exchange will qualify for tax deferral. Related parties are defined in IRC 267(b) and 707(b)(1)
Investment Basics
Like Kind and Foreign Property
To qualify for tax deferred exchange treatment under IRC 1031, the relinquished property must be exchanged for replacement property that is of like-kind?.
Investment Basics
Limitations on the Safe Harbor
The 1991 Treasury Regulations for tax deferred exchanges under IRC 1031 establishes four safe harbors, the use of which allow a taxpayer (Exchanger) to avoid actual or constructive receipt of money or other property for purposes of completing a 1031 exchange.
Investment Basics
New Principal Residence
Section 121 of the Internal Revenue Code allows exclusion up to $250,000 of the capital gain on a principal residence for single taxpayers and $500,000 for a married couple filing jointly.
Investment Basics
New Tax Law Effective 10-22-2004
On October 22, 2004, President Bush signed into law corporate and foreign tax legislation that also contained a provision affecting IRC 1031. Five Year Combined Hold Period Required to Exclude Gain Under IRC 121
Investment Basics
Rent Back Option for Buyer's and Seller's
One option would be to delay the closing until the sellers can move in to their new home. However, it may be advantageous to the sellers to close earlier. This way they have cash in hand and don't have to worry about whether the sale will close.
Investment Basics
Structuring Co-ownership of Rental Real Estate for Future Tax-Deferred Exchanges.
Structuring Co-ownership of Rental Real Estate for Future Tax-Deferred Exchanges.
Investment Basics
Tax Season Issues
Exchangers must report their exchange on the tax return for the year in which the exchange begins. The exchange is reported on Form 8824, Like-Kind Exchanges.
Investment Basics
Vesting Issues
To qualify as an exchange under IRC Section 1031 title to the replacement property must be held in the same manner as title to the relinquished property.
Investment Basics
What Property Qualifies for an 1031 Exchange
To qualify for a tax deferred exchange under IRC 1031 both the relinquished and the replacement properties must be held by the Exchanger for investment purposes or for productive use in their trade or business?.
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