Real Estate Strategies Archives - Think Outside the Tax Box

Real Estate Strategies

By David Johnson

Real Estate Developments Investments with Mineral Easements Option Course

This session will cover the basics of tax-efficient real estate strategies, specifically real estate development investments with a conservation easement option. The structure of each type of offering will be outlined in detail. The history of the laws addressing conservation easements will be discussed including an in-depth explanation on the current legislative landscape. Since the nature of each deal is driven by an underlying commodity, details outlining valuation and current market trends will be covered including the appraisal processes. Partnership voting will also be explained.

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How to Earn $1 Million in Two Years Tax-Free Using Real Estate

No doubt you’re familiar with taxes arising from the sale of real estate. Capital gains tax applies whenever anyone sells an asset for profit. A capital gain is the sale price minus your “adjusted basis.” ● The “basis” starts at the price paid for the property; and then: ● ADD the amount that was put into improving the property and; ● SUBTRACT the amount, if any, that you may have “written off” based on depreciation. ● Short term capital gains (within one year of purchase) are taxed as ordinary income. ● Long term capital gains are taxed at a lower rate. (15 percent if your taxable income is less than $501,600.) You’re probably also familiar with the homeowners’ gain exclusion for the sale of your primary residence. This is the spectacular Section 121 exclusion that allows you to exclude up to $500,000 of profit related to the sale of your home ($250,000 if you are single). But you may not be aware of how to claim this exemption on two homes – and you can do it on nontraditional homes such as boats or motorhomes and even vacation homes. Continue reading to learn how.

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Taking Care of Your Business: Estate Planning for Business Owners

You have put blood, sweat, and tears into your business and the hard work has finally paid off. Unfortunately, all the success may result in a significant tax bill for family members and very few resources available to pay it. Without an alternative, your business could end up on the chopping block for a fraction of what it is worth. It doesn’t have to be that way! Careful estate planning can result in: 1. Minimization of estate taxes 2. Generation of needed liquidity to satisfy estate expenses Continue reading to learn more!

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How to Turn a 1031 Real Estate Capital Gain Into a Passive Investment

You may be familiar with the concept of a 1031 exchange as a way to defer gain on the sale of rental or investment real estate. But what happens when you want to completely exit the real estate game? A 1031 Exchange may not be the best option for you. There are a few drawbacks associated with a 1031 exchange, including the limited time frame you must acquire the replacement property, and that you must continue to invest in real estate. If you’re looking to continue deferring current or previously exchanged gains, a Delaware Statutory Trust (DST) may provide a solution to these issues. But investing in a DST property or properties is like any investment. It comes with its own risks and rewards. Read on to find out more.

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When a 1031 Exchange May Not Actually Save On Tax

The 1031 Like-Kind Exchange (LKE) provides a great potential benefit to taxpayers who want to sell rental properties to purchase others in the United States. IRC § 1031 allows you to defer a taxable gain that would normally be taxed at the time of sale of a rental property. However, there are situations when a 1031 exchange may not be the best option for the taxpayer, and it could potentially dilute the tax savings when compared to a traditional sale or other gain minimization strategies. To take advantage of the tax deferral benefits of a 1031 exchange, you’ll need to follow a specific set of guidelines. Here, we will dive into the circumstances that you should review to determine if a 1031 exchange will be the best option in mitigating the taxes you owe.

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When a 1031 Exchange Should Be Used for Tax Savings

If you made money on your real estate investment, congratulations! You’re now in the same club that more than 90 percent of the world’s millionaires do to create wealth. Now it’s time for tax on that profit. A large tax bill generally means you made a large profit. But avoiding the tax can be like having your cake and eating it too. A 1031 Exchange is an incredibly powerful tool for you to defer the tax when used in the right circumstances. Many real estate investors and landlords look to the 1031 Like-Kind Exchange (LKE) as an excellent method of selling investment real estate without paying tax at the time of sale. This gives you more use of the cash you get at the sale and more time to use it.

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Will Changes to Qualified Improvement Property Get Me a Refund?

Question: I’m familiar with Qualified Improvement Property (QIP) and the technical correction made in 2020. What is everyone doing for returns when, if corrected, the client could benefit? Is it something you can amend the 2018 tax return for if you took a 179 expense instead of a bonus?

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Reduce Taxable Income Up to $25,000 with Passive Rental Losses

You have likely heard that owning rental real estate provides great tax benefits. This is true for a multitude of reasons, but there’s one benefit that is arguably the best of the bunch: The Small Taxpayer Allowance for Deducting Passive Rental Losses. Based on average household income levels, more than three-quarters of taxpayers can potentially qualify for this fantastic tax benefit that offers taxable income reduction of up to $25,000.

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