Pay 15% Tax Now On My Exchange, Or Maybe Double In A Year?
March 13th, 2008 · by Bob Meyer · 1 CommentWith the elections coming in the fall and a new president in office a year from now real estate investors are already scratching their head…wondering what a new administration will do with the capital gains tax rates.
The questions is: “Do I want to pay 15% now, or face possible higher taxes when I sell down the road a few years from now?”
The tax strategy in question is known as a 1031 exchange, which can be used for the trading of real estate and other assets (not stocks and bonds, however). Also called a like-kind exchange, a 1031 transaction lets a property owner roll over the capital gains from the sale of an old investment property to a new one if certain conditions are met. Or they can choose to cash out now and pay the prevailing capital gains tax rate of 15%.
This is certainly not an easy decision for real estate investors, and it shows the influence of politics on our lives. Fearful of greater taxes next year…it might be wise to take action now…on the other hand…decisions, decisions, decisions!
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This entry was posted on Thursday, March 13th, 2008 at 2:41 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 13th, 2008 at 6:23 am
Deciding to sell a property that could qualify for a 1031 exchange and paying the tax now vs. down the road because the tax rates MIGHT increase is very short sighted.
Many Americans have amassed great wealth in real estate by deferring their tax obligations and putting that money to work on your behalf (as opposed to Uncle Sam). It’s like getting an interest free loan from the IRS.
While a 1031 exchange is a powerful tool to assist in wealth preservation, it is not always suitable as people age. Many people would like to divest their real estate holdings (or other highly appreciated asset) as they head into retirement.
Most people are not aware they can defer their capital gains and depreciation recapture tax without being forced into buying replacement property (in a 1031 exchange). In addition, you can have very flexible reinvestment options that are designed to meet your goals and objectives. Investors will be amazed how much more wealth they will accumulate by deferring their taxes and not paying it upfront. I encourage you to visit http://www.selltaxdeferred.com to learn more.
However, If owning real estate is your goal, and you need help identifying replacement property, please do contact us to discuss your options. We can help you locate institutional quality properties nationwide.
Please visit to visit http://www.selltaxdeferred.com to learn more.