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If you own
investment property (real estate) in Southern California, you probably have
experienced equity growth in these past years. You may be reluctant to sell and
pay the tax on the gain.
Is there a way to
increase your Portfolio of Real Estate without digging into your pocket?
Consider this:
Whether an investor owns a property all cash or with leverage, the
benefits of a tax deferral are significant. The tax dollar saved can be
utilized to purchase additional property. The example below shows the
significant advantage of exchanging for an investor who sells a $425,000
property that has been fully depreciated and that was debt-free. This example
assumes the client is subject to a combined federal and state tax bracket of
35%.
The investor who executed a property 1031
Tax Deferred Exchange defers the payment of capital gains taxes.
Example
|
Sale |
Exchange |
| Net Equity (minus
cost) |
$400,000 |
$400,000 |
| Taxes (35%) |
$150,000 |
None |
| Funds to Reinvest |
$250,000 |
$400,000 |
If an investor leverages his new property to 70% by putting 30% down,
he/she could purchase properties totaling:
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Acquisition
Value |
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| $833,000 |
$1,300,000
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By completing a 1031 Tax
Deferred Exchange, the investor has increased his/her portfolio by
$467,000!!!
Remember rental houses qualify as
investment property. The 1031 Tax Deferred Exchange is one of the last tax
shelters allowed by the IRS.
Contact me by
clicking on this link to find out more about 1031 Tax Deferred Exchanges and
find out if your investment property qualify. |
Curb Appeal >Upgrade Before You Sell
Real estate agents sometimes receive calls from homeowners asking for advice on what they should do to prepare their house to go on the market. They may have settled for living in a "less than optimal" circumstance for years, and are now going to spend money to make it nice for someone else to enjoy.
If you are considering painting, updating the kitchen, landscaping, or making any other improvements that will increase your home's re-sale value, think about making those improvements while you are still there to enjoy them. Create your own dream kitchen, master suite or spa, build an outdoor living room or restore your wood floors now. Improving your property will make your home more enjoyable, help maintain the property values in your neighborhood, and expedite the sale of your home when you are ready for a move.
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| Q |
What is considered to be one of the soundest long-term investments?
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| A |
Real estate has a long-term record of strong investment return and is a driving force of the national economy.
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 See More Real Estate Trivia > |
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- NUMBER1EXPERT™ 
