Are You Tired of Tenants, Toilets, and Trash?
Wouldn't you rather go to Tahiti? Are you a landlord with rental asset whose value has significantly appreciated? Are you ready to cash in those profits and take that trip to Tahiti?
Are You Tired of Tenants, Toilets, and Trash?
Are You Tired of Tenants, Toilets, and Trash?
Are You Tired of Tenants, Toilets, and Trash?
Are You Tired of Tenants, Toilets, and Trash?
Before selling your property, check with your accountant who
will tell you that you will be paying ,000 in Capital
Gains Tax to Uncle Sam. Your accountant will also tell you
that adding other ,000 to your earnings by that sale is
called recaptured depreciation. This will bump you into the
next tax bracket and doom you next April 15th into sending
the Irs a check for maybe other ,000.
Are you still ready to sell that property?
It looks like that trip to Tahiti is going to be sometime in
the far future...
But wait! You settle to check with your realtor and then
find out about a 1031 exchange to defer your Capital Gains.
Your realtor tells you if you buy other like-kind rental
property of equal or greater value, you won't get hit with
the gains tax on the sale. That is all fine and good, but
it does not de facto get you out of the headaches associated
with collecting rent, holding your unit occupied, finding
clean/classy tenants that won't trash the place, nor does it
keep you from getting that 2am call to fix an overflowing
toilet. To top this off, now you have to pay more in
property taxes and must fee higher rent.
Hmm...maybe this idea is not the marker to that South Pacific
paradise either.
This is the dilemma I heard from my financial clients again
and again. They were frustrated and felt trapped in their
current situation. So what is a frustrated earnings property
owner to do? After a lot of investigate and roadblocks, I found
the excellent clarification that has changed the lives of my
clients and took away stress to bring enjoyment of life.
For anything who is tired of being a landlord and who owns a
rental/commercial asset that has gone up a lot in value,
take heart.
A 1031 exchange into a Tenant In coarse asset may be your
answer.
There are very exact rules to corollary set by the Irs, and
the entire detailed process is the subject for a future
article, but here's the gist:
1-Sell your current income
property;
2-Before the close of escrow, you speak via a Qualified
Intermediary (also called an Accommodator, who is a
qualified third party) that you intend to do a 1031 exchange
into a Tenant in coarse Property;
3-Work with a reputable
company to identify a asset that you would like to
purchase an interest in;
4-At the close of escrow, your
proceeds are transferred by the Accommodator to purchase
your proportionate share of a larger "A" rated commercial
building;
5-You may pick a firm center, a medical
office building, or similar high-end property; and lastly,
6-You get a deeded interest in this property, so you can
keep it, resell it, pass it to your heirs, or even gift it
to charity upon your death.
The way that this works is all the new fractional owners, or
"Tenants in Common" hire an ace administration firm to handle
all the asset administration tasks. The firm finds and
keeps high quality tenants, does the maintenance and
upgrades, pays the asset taxes, and handles all the day
to day emergency that arise. Probably the three most important
factors in this entire process are:
1-Your choice of company
that offers the properties for sale;
2-the Accommodator,
and;
3-the administration company.
Make sure each of the three parts is a top notch with proven
track records. anything less could spell disaster.
When this 1031 choice is done properly, your benefits will
be:
Deferral of all Capital Gains,
A monthly contractual earnings (usually based on 6-7% return
on equity),
Building depreciation for tax savings,
Unlimited asset appreciation potential, and
No more headaches of asset management.
Good-bye Tenants, Trash and Toilets!
Hello Tahiti!
Are You Tired of Tenants, Toilets, and Trash?
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