***Real Estate Investors***
Let us show you how to avoid...
$1,000's in Capital Gains Taxes...
~and~
Increase Your Wealth-Building Power!
Important information:
An exchange benefits you even more than the taxes saved... It's a Wealth Building Tool!
Consider the case of two investors each with $200,000 appreciated equity in their properties.
• Investor A sells without an exchange, pays $40,000 in capital gains taxes and uses the $160,000 remaining as a 25% down payment on a $640,000 office building.
• Investor B exchanges free of taxes and uses the full $200,000 equity as a 25% down payment to acquire an $800,000 office building.
• That means Investor B has acquired $160,000 more income-producing property. So not only has the astute investor saved $40,000 in taxes... the tax savings are available to leverage into even greater income growth!
A Section 1031 Deferred Exchange CAN SAVE YOU BIG BUCKS! Selling business or investment property normally requires payment of capital gains taxes. Depending on the property's appreciation in value and the length of time depreciated, that tax bill can be heavy... heavy enough to stop many individuals from selling the property.
However, under the provisions of Internal Revenue Code Section 1031, these capital gains taxes can be deferred (or even avoided) if you "exchange" the property through a "Qualified Intermediary."
Let’s Clear up the myths!
Many misconceptions exist about exchanges...Jersey Realty Exchange Corporation is leading the way in changing that...simplifying and clearing away the confusion to reveal what is truly one of the most powerful tax-saving, wealth-building tools available to today's real estate investor.
Myth: "I have to 'swap' properties with another investor to qualify."
Fact: Two party exchanges are rare. Most often, it happens like this:
Taxpayer finds a buyer and sells the property through a Qualified Intermediary.
Taxpayer then finds another business or investment property (anywhere in the country) that fits the taxpayer’s needs.
Taxpayer buys replacement property - again through the Intermediary. "Exchange" isn't the best word to describe this transaction. It's really a rollover of equity. The parties don't know each other and their properties can be in different states.
Myth: "This 'Like-Kind' rule is too restrictive. I don't want to exchange for the same kind of property."
Fact: "Like-Kind" means "other real property"... not necessarily the same type of property that you're selling. So you can sell your vacant land in New Jersey and buy an apartment building in Florida.... sell your motel and buy an office building... sell your rental condo and buy a duplex.
Myth: "I have to find a new property to buy before settlement so that title can pass simultaneously at settlement."
Fact: The properties do not have to close at the same time. The taxpayer has 45 days after the settlement to identify replacement property(s) and 180 days (or before taxes are due for that year) to settle on the replacement property(s). You can identify up to 3 replacement properties of any value...or identify more than 3 as long as the fair market value of all the properties totals no more than 200% of the fair market value of the relinquished property. You can buy as many properties as you wish.
Myth: "My brother-in-law, attorney or my Realtor can be the Intermediary."
Fact: Regulations specifically exclude the taxpayer's agent, broker, attorney, accountant, most family members and others with a business relationship with the taxpayer from serving as an intermediary. You want an Intermediary that is financially strong so your assets are fully protected during the exchange... with knowledgeable pros who can make your exchange hassle-free and worry-free... that's why selecting Jersey Realty Exchange Corporation is a smart move. Our in-house CPA, independently audited financial statements and fidelity bond insurance policy add comfort and assurance to a successful exchange.
Myth: "I'll have to pay taxes eventually. I might as well do it now."
Fact: Who knows what capital gains rules will be in future years?! However, the wealth-building power of using the equity you save by not paying taxes now can be used to buy more investment property... and, when your heir's inherit your investment property, they take it over at it's then-current market value (or stepped-up basis). So any tax liability will be limited to the gains in value from the date of their acquisition, not during the years of your ownership. In other words, those taxes you're saving now would never be paid!
Every aspect of the exchange program is managed by knowledgeable professionals to achieve full compliance with IRS regulations. Whom you select as your Qualified Intermediary does make a difference. Select the exchange professionals.
The Biggest Rewards Go To The Most Informed!!
This publication is designed to provide accurate information on tax deferred exchange. The publisher is not engaged in rendering legal or accouting services. If legal or tax advice is required, the services of a competent accounant or tax attorney should be sought. |
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