There are many ways to benefit from a 1031 exchange. Below are a few of the advantages to this powerful tax strategy:
Tax Savings: Federal and State taxes combined can be as high as 28% of the gain on investment property.
Leverage: Every dollar you save in taxes allows you to increase your investment portfolio through acquisition of real estate worth many times your initial purchase.
Income: Increase your cash flow by exchanging out of bare lands and into an income-producing property.
Consolidation: Exchange from several management-intensive properties into a larger property with on/off-site management.
Many investors that buy and sell real estate want to know when they are crossing the fine line from being an investor to becoming a dealer.
It is one of the “gray areas” of IRC Section 1031. A dealer can have properties that he uses for his business, but he is also entitled to be an investor like anyone else. The best source that can be referred to are 9 points that the tax court used to determine “Dealer Status” in the Klarkowski court case.
These 9 points can help an investor to determine if they fall into the dealer category:
1. The purpose for which the property was acquired.
2. The purpose for which the property was subsequently held.
3. The extent of improvements made.
4. The frequency, number, and continuity of sales.
5. The extent and nature of the property within the transaction.
6. The ordinary or general business of the taxpayer.
7. The extent of advertising and promotion for sale.
8. Whether the property was listed with a real estate broker or other outlets.
9. The purpose for which the property was held at the time of sale, as opposed of the time of acquisition.
NCS Exchange Professionals is dedicated to providing you with the necessary tools to help you make informed decisions regarding your investment. Below are a few of the many services we offer:
– Free Client Consultations – never a fee or obligation
– Online Exchange Ordering
– Interactive Website: http://www.ncs1031.com