In 2002, the IRS issued guidelines (Revenue Procedure 2002-22) for the structure of Tenant In Common (TIC) property investments. These guidelines dictate that a Tenant In Common ownership, also known as (fractionalized) co-ownership of real estate (CORE) or other investment properties, i.e. Planes, Yachts, Oil & Gas, etc. should follow cer...

IRS 1031 stipulates that the seller cannot have “actual or constructive receipt” of the funds before receipt of the replacement property.  That means that if the seller gains control of the funds, then he has constructive receipt, and the tax deferral is voided.  In other words, if the seller pockets the money from the sale of Property 1, with the intention to pile it into Property 2, he loses out on t...

You must pay very close attention to the timing rules set in place by the IRS.  When the property is sold and the title passed to the buyer, the timing requirements to locate and acquire the replacement property begins.  You have only 45 days to create a printed list of up to three possible replacement properties delivered to your Facilitator....

There are three prerequisites that must be met to accomplish a 1031 with complete non-recognition of capital gains.  One of which is that the time requirement must be strictly followed.Under the regulations (Tax Reform Act of 1984), two time limitation periods have been imposed on deferred real estate exchanges: 1) Replacement property is required to be identified within a certain time, and 2) the replacement property should be received by the investor within a certain period of...

Basic information about 1031 Exchanges...

background information or a bit of history regarding starker exchange...

There are three prerequisites that must be met to accomplish a 1031 with complete non-recognition of capital gains. The properties being exchanged must qualify and be of “like-kind”; There must be an actual exchange, not a transfer of property of money only; and the time requirement must be strictly followed.For a 1031 exchange to happen, both relinquished property and replacement property must qualify. In other words, both the property you are selli...

Section 1031 of the tax code is the obvious option for real estate investors who are selling one investment property and interested in purchasing more. Until now, shareholders in search of cash-flowing properties were forced into buying another actively managed property. It was a tough decision for those looking to escape the administrative headaches associated with typical leased property. Investors now have an option; enter Tenant in Common (TiC)....

1031 Exchanges Get New Time LimitsWhat that Means for You October 22, 2004.  President Bush signs into law a new tax legislation that changes the provisions of Section 1031 and 121 of the tax code. What it means for ...

Baby Boomers all over the United States who own real estate portfolios are leaning toward fractional real estate ownership, also known as tenant-in-common investments (TiC).  Boomers simply consolidate their real estate holdings into one clean, easy to manage investment.The boomers, who are now easing into retirement, have a history of investing in stocks and mutual funds.  Now, how...

Real estate has the reputation for providing it’s investors with an established investment that provides income and appreciation.  Few tax payers realize that they can self-direct their IRS’s and additional retirement plans into real estate,  since most investors just visualize the stock market and CD’s as their only IRA investment options. ...

The average investor may not know the secret of using Sections 121 and 1031 of the Internal Revenue Code to avoid capital gains tax.  If the investor’s principal residence has appreciated in value beyond the $500,000 gain exclusion as prescribed under Section 121 of the IRS code, is he stuck paying taxes on the profits over $500,000?  Not with some advanced planning.Section 12...

IRS Section 1034 is a law regarding your “personal” residence.  It says that the home that you live in will not be eligible for an exchange since you cannot mix IRC Section 1031 with 1034.  Simply, you cannot sell your home and use it to buy investment or business properties under IRC 1031.  Additionally, you cannot sell business or investment property to purchase a main residence that you intend to li...

We know what you’re thinking, “These tax loopholes are only for the rich.”  Well, not anymore!  If you arrange for the sale of your venture properties or business as an “Exchange”, and then plow all of the monies from the sale into buying more investment properties or business, you pay no income tax on it!  Additionally, your income taxes are postponed until the day that you decide to...

If you have any non-income producing real estate investments, such as empty land, you are not receiving any cash flow from it.  Tax-deferred exchange would allow you to exchange the raw land for an income producing property, such as a rental home or duplex.  The benefits are income tax deductions such as depreciation, and cash flow. If you o...

If you want a totally tax free exchange, you must remember that the replacement property must be equal or greater in value and debt than the property being exchanged.  When you sell your property, the replacement property must be equal or greater than the sale price and existing debt of the property being sold/exchanged, and ALL of your equity from the property that you are selling/exchanging must go into acquiring the repl...

Amongst the three prerequisites that must be met to accomplish a 1031 exchange with complete non-recognition of capital gains, is that an actual exchange occurred and not just a transfer of property in replacement of money.If the investor simply sells the property and reinvest the money in another property, the deals will not qualify for exchange treatment, even though it is a simultaneous process.Like-kind exchanges can take many forms. One of these ...

1031 real property exchange is rapidly becoming an important aspect of real estate dealings. But there still are misconceptions regarding 1031 exchanges that hinder investors from taking advantage of the benefits of a 1031 exchange. Here are some of the most popular misconceptions:1. 1031 is a tax free property exchangeA 1031 exchange is a tax-deferred transaction, NOT a transaction wherein the capital gains tax would entirely be free and no longer re...

When you are entering a 1031 exchange, remember to note some of these details: Choose a good QI Before you put the property under contract, find someone to act as a qualified intermediary (QI). It is advisable to c...