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Atricle Dump - A 1031 Exchange Exit Strategy With Profit Potential
Maybe it has something to do with a childhood home we fondly remember. Many of us long for old homes built with solid construction, quality craftsmanship and beautiful details. We wax poetic and wistfully recall the hand carvings, plaster walls and eyebrow dormers of homes we’ve known. On the other hand, how do the old homes we admire compare with newly minted models—and what should we consider before deciding which to buy?Location. Typically, old homes sit on generous plots of land in or near town. The neighborhoods are established and usual
LESS COMPLICATIONS:
Ask yourself, “Would I like my life to be less complicated? Would I like to avoid taxation of my capital gain? Am I tired of managing real estate? I f a cash-rich public company offered me a tax-free, good price for my investment property, would I accept the offer?”
STEP-UP BASIS:
Similar to any investment property, by maintaining ownership of the UPREIT-interest until one’s death, one’s surviving spouse or heir(s) will receive it on a
If you're anything like me, you'll frequently get sick and tired of the boss man constantly on your back. Does the company you work with grate on your nerves to the extent where you'd love to just scream for some relief? Did they give you the bonus they promised, or that well earned pay increase. If this sounds all too familiar, you might want to think about other potential avenues of employment.Big corporations aren't the only route nowadays. Over the last decade, the times have changed. Recently it has become much more feasible to go it alone an
Now the small investor can step up to the big leagues. REITs (real estate investment trusts) are leading the real estate comeback parade. REITs offer investors the diversity that would otherwise take millions in borrowing power to achieve. There are over 300 REITs today with assets totaling over $130 billion. They are generally seeking to acquire properties with a worth of $10 million or more. Baby boomers saving for their retirements will likely continue contributing until 2013. If only a small percentage of this new capital purchases REIT-stocks, analysts in Barrons’ January 1999 report forecast REIT-sector annualized total earnings of potentially, 20% for many years. In April of 1999, Barron’s reported that “the average cash flow on REITs is 10% to 12% versus 7% to 9% in the private market. Although 1998 was the worst year for the market value of equity-REIT stocks in close to 25 years, the sector turned in an average increase in earnings of 13%. But hold on; let’s not put the cart before the horse. The key to the real estate kingdom is a two-step process.
STEP ONE:
First you must sell your current smaller property and reposition your equity by doing a 1031 exchange into a replacement property, as a TIC (tenant-in-common) with others, of the quality and value that REITs want to purchase.
As a tenant-in-common (TIC) owner, one’s passive revenue and deductions are reported on his/her Schedule E, the same as any direct-ownership interest in a rental property. Each TIC is a direct owner with complete control of his/her fractionalized interest with a separate deed, title and escrow, as required to accomplish a 1031 exchange.
Instead of owning all of the property, a TIC owner may own perhaps 20% of a larger, newer, better-performing property – the type and value of property that REITs are buying.
STEP TWO:
Having upgraded to a piece of major-league property you have all the traditional exit options – plus more. You may elect to keep your interest. Alternatively, you might be able to sell the property to a REIT or institutional investor for more value than it is worth. This can be the stuff that real estate dreams are made of.
BEST OF BOTH WORLDS:
The direct exchange of properties for REIT stock creates a taxable event for the transferor. But an UPREIT (umbrella real estate trust) solves this taxation problem. Starting in 1992 this new form of REIT emerged and has proved popular and, since its creation more than 75% of new REITs have taken that form. It is the union of a REIT with an Operating Partnership (OP) wherein the partners have the right to convert their OP-interest to the REIT’s stock, but until they exercise this right, it is not a taxable event.
LESS COMPLICATIONS:
Ask yourself, “Would I like my life to be less complicated? Would I like to avoid taxation of my capital gain? Am I tired of managing real estate? I f a cash-rich public company offered me a tax-free, good price for my investment property, would I accept the offer?”
STEP-UP BASIS:
Similar to any investment property, by maintaining ownership of the UPREIT-interest until one’s death, one’s surviving spouse or heir(s) will receive it on a s
Emergencies never knock on the doors before coming. So, anybody can have a financial emergency without warning. The trouble could be great for you if you have a bad credit score, so obtaining a loan can become very difficult. For this purpose, there are facilities like bad credit cash advance services.These services provide you with money almost instantly, within minutes or at times hours of applying for the loan. The best part of these cash advances is that no one is going to ask you what you need the money for. A bad credit cash advance wit
STEP ONE:
First you must sell your current smaller property and reposition your equity by doing a 1031 exchange into a replacement property, as a TIC (tenant-in-common) with others, of the quality and value that REITs want to purchase.
As a tenant-in-common (TIC) owner, one’s passive revenue and deductions are reported on his/her Schedule E, the same as any direct-ownership interest in a rental property. Each TIC is a direct owner with complete control of his/her fractionalized interest with a separate deed, title and escrow, as required to accomplish a 1031 exchange.
Instead of owning all of the property, a TIC owner may own perhaps 20% of a larger, newer, better-performing property – the type and value of property that REITs are buying.
STEP TWO:
Having upgraded to a piece of major-league property you have all the traditional exit options – plus more. You may elect to keep your interest. Alternatively, you might be able to sell the property to a REIT or institutional investor for more value than it is worth. This can be the stuff that real estate dreams are made of.
BEST OF BOTH WORLDS:
The direct exchange of properties for REIT stock creates a taxable event for the transferor. But an UPREIT (umbrella real estate trust) solves this taxation problem. Starting in 1992 this new form of REIT emerged and has proved popular and, since its creation more than 75% of new REITs have taken that form. It is the union of a REIT with an Operating Partnership (OP) wherein the partners have the right to convert their OP-interest to the REIT’s stock, but until they exercise this right, it is not a taxable event.
LESS COMPLICATIONS:
Ask yourself, “Would I like my life to be less complicated? Would I like to avoid taxation of my capital gain? Am I tired of managing real estate? I f a cash-rich public company offered me a tax-free, good price for my investment property, would I accept the offer?”
STEP-UP BASIS:
Similar to any investment property, by maintaining ownership of the UPREIT-interest until one’s death, one’s surviving spouse or heir(s) will receive it on a
First make sure that the people you are sending your offer to are actually interested in what you are offering.Often people contact me and ask me to promote their product to my list. If it isn't congruent with the products I have then I never cross the line and promote them to my list.People give you their details trusting you to let them know when something good becomes available.Don't blow it by talking about something they're clearly not interested in.Personalize every email you send out, especially in the Subject Head
As a tenant-in-common (TIC) owner, one’s passive revenue and deductions are reported on his/her Schedule E, the same as any direct-ownership interest in a rental property. Each TIC is a direct owner with complete control of his/her fractionalized interest with a separate deed, title and escrow, as required to accomplish a 1031 exchange.
Instead of owning all of the property, a TIC owner may own perhaps 20% of a larger, newer, better-performing property – the type and value of property that REITs are buying.
STEP TWO:
Having upgraded to a piece of major-league property you have all the traditional exit options – plus more. You may elect to keep your interest. Alternatively, you might be able to sell the property to a REIT or institutional investor for more value than it is worth. This can be the stuff that real estate dreams are made of.
BEST OF BOTH WORLDS:
The direct exchange of properties for REIT stock creates a taxable event for the transferor. But an UPREIT (umbrella real estate trust) solves this taxation problem. Starting in 1992 this new form of REIT emerged and has proved popular and, since its creation more than 75% of new REITs have taken that form. It is the union of a REIT with an Operating Partnership (OP) wherein the partners have the right to convert their OP-interest to the REIT’s stock, but until they exercise this right, it is not a taxable event.
LESS COMPLICATIONS:
Ask yourself, “Would I like my life to be less complicated? Would I like to avoid taxation of my capital gain? Am I tired of managing real estate? I f a cash-rich public company offered me a tax-free, good price for my investment property, would I accept the offer?”
STEP-UP BASIS:
Similar to any investment property, by maintaining ownership of the UPREIT-interest until one’s death, one’s surviving spouse or heir(s) will receive it on a
One of the problems with the traditional teambuilding event format is that it is essentially divisive. A selection of activities is laid on and the group is divided into teams to have a go at each activity. An example might be a group of 20 divided into four teams of five to try archery, laser clay shooting, quad bikes and dune buggies.Not only does this isolate people into teams which may be separated over the course of the event but often teams are encouraged to compete against each other so that a winning team can be announced at the end o
Having upgraded to a piece of major-league property you have all the traditional exit options – plus more. You may elect to keep your interest. Alternatively, you might be able to sell the property to a REIT or institutional investor for more value than it is worth. This can be the stuff that real estate dreams are made of.
BEST OF BOTH WORLDS:
The direct exchange of properties for REIT stock creates a taxable event for the transferor. But an UPREIT (umbrella real estate trust) solves this taxation problem. Starting in 1992 this new form of REIT emerged and has proved popular and, since its creation more than 75% of new REITs have taken that form. It is the union of a REIT with an Operating Partnership (OP) wherein the partners have the right to convert their OP-interest to the REIT’s stock, but until they exercise this right, it is not a taxable event.
LESS COMPLICATIONS:
Ask yourself, “Would I like my life to be less complicated? Would I like to avoid taxation of my capital gain? Am I tired of managing real estate? I f a cash-rich public company offered me a tax-free, good price for my investment property, would I accept the offer?”
STEP-UP BASIS:
Similar to any investment property, by maintaining ownership of the UPREIT-interest until one’s death, one’s surviving spouse or heir(s) will receive it on a
Bad check writers are opportunists that stay on the fringes of crime. They know how to manipulate the system to their advantage. They know and take advantage of the overworked and paper-heavy judicial agencies responsible for check collections. They lie, push, delay and make numerous excuses in an attempt to avoid or delay paying off their bad checks.County agencies assigned to collect bad checks are doing the best they can. However, because of the sharp increase in numbers of citizens choosing this form of crime, the agencies are bec
LESS COMPLICATIONS:
Ask yourself, “Would I like my life to be less complicated? Would I like to avoid taxation of my capital gain? Am I tired of managing real estate? I f a cash-rich public company offered me a tax-free, good price for my investment property, would I accept the offer?”
STEP-UP BASIS:
Similar to any investment property, by maintaining ownership of the UPREIT-interest until one’s death, one’s surviving spouse or heir(s) will receive it on a stepped-up basis. The surviving spouse or heir (s) may then sell the REIT’s stock, and the capital gains tax has evaporated completely. Nowhere does it require you to manage real estate until you die to benefit from a stepped-up basis. Once more by eliminating day-to-day management involvement, you just might simplify your life and live longer.
WIN, WIN, WIN
Orchestrating a 1031 exchange with an UPREIT exit has many benefits, but “to go to taxpayer’s heaven, you have to die.” An UPREIT’s exit strategy required a lifestyle change from active to passive management. For many this change is a welcome relief.
• No capital gains taxes
• No property management
• Daily stock liquidity
• More return potential
• More diversity, and
• More safeguards.
What’s wrong with this picture?
“America has always had two tax systems;
one for the informed and one for the uninformed.
Both systems are legal.”
Former Justice Learned Hand
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