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02/25/2025

1031 Exchange Timeline Calculator A 1031 Exchange requires meeting very strict deadlines for successful completion. Use this calculator to help you determine the deadlines for the 45-Day Identification Period and the 180-Day Exchange Period based on the closing date you provide for the relinquished....

09/19/2024

🔖Bookmark this 2024 MAX TAX Deduction Calculator🧮

👉NOW is the time that smart investors and entrepreneurs are doing 2024 tax planning.

👉Tax-favored retirement account contributions can slash your tax bill while creating opportunities for tax-free ROI.

Following is a link to ReSure's online and interactive calculator to help you with your 2024 tax planning.

The calculator helps you compare, contrast, and strategize for the following tax-advantaged retirement accounts:
▶️Solo 401(k)
▶️SEP-IRA
▶️SIMPLE-IRA
▶️Profit-Sharing Plan

Click below to access an interactive max tax deduction calculator👇

https://www.resurefinancial.com/solo-401k-qrp-max-contribution-calculator-2024/

QRP, 401k, Solo 401(k), SEP-IRA, SIMPLE-IRA Max Contribution Comparison Self-employed individuals and businesses employing only the owner, partners and spouses have several options for tax-advantaged savings: an Individual 401(k) plan, a SEP IRA, a SIMPLE IRA, or a Profit Sharing plan. Each option h...

09/16/2024

Final opportunity for investors and entrepreneurs to tweak 2023 tax results using retirement account contributions.

Tax-favored retirement account contributions can substantially reduce your tax bill while creating opportunities for tax-free ROI.

Following is a link to ReSure's online and interactive calculator to help you with your 2023 tax planning.

(2024 Calculator to be shared in a subsequent email.)

The calculator helps you compare, contrast, and strategize for the following tax-advantaged retirement accounts:
▶️Solo 401(k)
▶️SEP-IRA
▶️SIMPLE-IRA
▶️Profit-Sharing Plan

https://www.resurefinancial.com/solo-401k-qrp-max-contribution-calculator-2023/

QRP, 401k, Solo 401(k), SEP-IRA, SIMPLE-IRA Max Contribution Comparison Self-employed individuals and businesses employing only the owner, partners and spouses have several options for tax-advantaged savings: an Individual 401(k) plan, a SEP IRA, a SIMPLE IRA, or a Profit Sharing plan. Each option h...

09/13/2024

🔖Bookmark this Interactive 1031 Exchange Tax Calculator🧮

3 Key 1031 Exchange Tax Formulas🧑‍🏫

👉To completely avoid taxes, both the VALUE and EQUITY in the replacement property must be at least equal to the VALUE and EQUITY in the relinquished property

👉To the extent that either VALUE or EQUITY in replacement property is less than VALUE or EQUITY in the relinquished property, you are taxed on the GREATER OF:
▶️the trade down in value and
▶️the trade down in equity

👉Your tax basis in replacement property equals its cost, less the amount of gain deferred through the 1031 exchange.

Click below to access an interactive 1031 exchange tax calculator.⌨️

https://www.resurefinancial.com/1031-exchange-calculator/

1031 Exchange Calculator This 1031 Exchange calculator will estimate the taxable impact of your proposed sale and purchase. To pay no tax when executing a 1031 Exchange, you must purchase at least as much as you sell (Net Sale) AND you must use all of the cash received (Net Cash Received). If you ta...

09/11/2024

🔖Bookmark this 1031 Exchange Timeline Calculator🧮

Real estate investors using a Section 1031 exchange to defer taxes need to be aware of - and plan ahead for - 1031 exchange deadlines.

👉For your 1031 REPLACEMENT PROPERTY to be "like kind" and qualify for tax-deferral it must be IDENTIFIED before the end of the 45- day IDENTIFICATION PERIOD.

👉Replacement property must be acquired during the exchange period, which ends at the sooner of:
▶️180 days after the transfer of the relinquished property
▶️the tax return due date for the year during which the relinquished property was transferred

Click below to access a handy 1031 exchange timeline calculator.⌨️

https://www.resurefinancial.com/1031-exchange-timeline-calculator/

1031 Exchange Timeline Calculator A 1031 Exchange requires meeting very strict deadlines for successful completion. Use this calculator to help you determine the deadlines for the 45-Day Identification Period and the 180-Day Exchange Period based on the closing date you provide for the relinquished....

08/04/2024

📢Real Estate Tax Bulletin: 100% Bonus Depreciation is no longer close to coming back😞

The Tax Relief for American Families and Workers Act of 2024, containing attractive real estate tax provisions, passed the House in January 2024 with strong bi-partisan support and was expected to become law.

Unfortunately, as of August 1, the Senate failed to pass the TRAFWA by a vote of 48 to 44. 60 votes were required for it to pass the Senate.

Key provisions of the bill, impacting real estate:
▶️100% bonus depreciation through the end of 2025
▶️Increasing interest tax deductions
▶️Increasing Section 179 tax deductions

At this stage, it's unlikely that there will be any significant tax legislation passed until after the November 2024 election.

https://members.resurefinancial.com/posts/the-trafw-act-of-2024-what-real-estate-investors-need-to-know-and-do

Status update, 8/1/24 : Unfortunately, the Senate failed to pass the American Families and Worker’s Act of 2024 (TRAFWA) by a vote of 48 to 44 (it required 60 votes to pass). The Tax Relief for Ame...

06/21/2024

The seamy underbelly of 1031! Less Tax Deductible Depreciation!😱

👉 When doing a 1031 exchange, TAX BASIS in the replacement property is REDUCED by the amount of gain deferred through the 1031 exchange.

👉 The math formula that determines replacement property basis 🧮: Depreciable basis in the new property = Cost of new property - Gain not recognized due to 1031

👉 Ipso Facto: Depreciation tax deductions on a property acquired through 1031 exchange will be lower than those available through a similar acquisition effected w/o 1031.

👉 In almost all circumstances, the advantages and benefits of a 1031 exchange far outweigh and "lost" depreciation deductions.

A strategically executed 1031 can actually INCREASE your tax deductions!😎

👉 Basis in the replacement property is allocated between land and improvements in proportion to their relative fair market values.

👉 The allocation of basis between land and improvements of the relinquished property does not impact the land-improvement allocation applicable to the replacement property.

👉 You can increase depreciation deductions by acquiring replacement property with a larger portion of the basis allocated to depreciable improvements. 🎉

05/30/2024

What's the Standard 1031 Exchange Process?

After much content regarding complexities and nuances of 1031 exchanges - it's a good idea to "Zoom out" and provide a bird's-eye view of the standard, uncomplicated 1031 exchange process.

👉Prior to closing the sale of the Relinquished Property
▶️Exchanger and Qualified Intermediary must enter into an Exchange Agreement.

▶️Exchanger must assign its rights under the Relinquished Property sale contract to the Qualified Intermediary.

▶️All parties to the sale contract must be notified, in writing, of the assignment.

👉Closing of the Relinquished Property
▶️Title is conveyed directly to the buyer.

▶️Net proceeds from the Relinquished Property sale (the "Exchange Funds") are paid directly to the Qualified Intermediary, to be held for the benefit of the Exchanger until used to purchase Replacement Property.

👉1031 Exchange Identification Timing: 45 Days
▶️An Exchanger has 45 calendar days, from the date the Relinquished Property is transferred, to identify potential Replacement Properties.

▶️After day 45, the Exchanger only the identified properties may be acquired as eligible replacement property.

▶️Identification must be specific and unambiguous, in writing, signed by the Exchanger, and delivered - prior to the end of the 45-day Identification Period - to the Qualified Intermediary or certain other parties to the transaction [Treas. Reg. §1.1031(k)-1(c)(2)].

▶️The list of identified potential Replacement Properties cannot be changed after the 45th day.

▶️If no property is identified, the Exchange Funds will be returned to the Exchanger after the 45th day.

👉Prior to closing the sale of the Replacement Property
▶️The Exchanger must assign its rights under the Replacement Property purchase contract to the Qualified Intermediary.

▶️All parties to the purchase contract must be notified, in writing, of the assignment.

▶️The Exchanger authorizes the Qualified Intermediary to wire funds directly to the seller or closing agent for purchase of Replacement Property.

👉Closing of the Replacement Property
▶️Title is conveyed directly to exchangor.

👉1031 Expiration Timing: 180 Days
▶️Acquisition of Replacement Property must be completed by the earlier of:
⏩the 180th day after transfer of the first Relinquished Property or
⏩the due date (including extensions) for filing the Exchanger’s tax return.

(Important tip: If you're in middle of an exchange started in a prior tax year, get a tax filing extension.)

▶️Any unused Exchange Funds are returned to the Exchanger at expiration of the exchange.

While there a myriad of details to address in every exchange, understanding the broad overview of the standard exchange process helps everything fall into place.

05/15/2024

A comprehensive series on The Short-Term Rental Loophole - "The STR Loophole"

What's it all about?

👉The STR Loophole enables you to dodge Passive Activity Loss Limits and (potentially) use real estate losses to pay zero taxes on your active income

▶️The "STR Loophole" allows owners of STRs to use substantial accelerated tax deductions, attained through Cost Segregation, to offset taxable income from their businesses and/or employment.

▶️Typically, the Passive Activity Loss limits preclude using real estate rental property losses, which the Tax Code defines as "passive," to offset non-passive income (e. g., W-2 salary, 1099-NEC Independent Contractor income, etc.).

▶️STR tax losses, when properly planned for, can be treated as "active" and used to substantially - if not completely - eliminate your tax bill!

👉The Steps to execute the STR loophole tax tactic:

At a high level, following are the steps for executing the STR loophole tax tactic:

1️⃣ Acquire an investment property that presents financial upside as an STR

2️⃣ Rent out the property as an STR

3️⃣ Maintain an average rental period of 7 days or less

4️⃣ Materially participate in the STR activity

5️⃣ Get a Cost Segregation study done to accelerate your depreciation tax deductions

6️⃣ Claim massive "active" tax deductions on your tax return, offsetting "active" taxable income from other sources🥳

Sounds real easy, too easy. But, like all tax tactics, the devil is in the details. Subsequent posts will dive in to all the fine print on what has become known as "the STR loophole."

05/13/2024

Balancing the Exchange⚖️

▶️To fully avoid taxation in a 1031 exchange, an exchanger must ensure they receive no "boot."

▶️Thankfully, even in the event boot is received, in many instances it can be offset - or netted - against boot paid.

▶️Realized gain is "recognized" or taxed only to the extent of net "boot" received.

1031 Exchange Boot Netting Rules

👉Rule 1: Liabilities assumed offset liability relief in the exchange. Stated differently, mortgage boot paid offsets mortgage boot received.

👉Rule 2: Cash boot paid by the exchanger offsets liability relief received in the exchange.

👉Rule 3: Cash boot received by the exchanger is not offset by debt assumed by the exchanger.

👉Rule 4: Cash (or other non like-kind property) paid by the exchanger offsets cash received - in some circumstances.

05/09/2024

What are the key numbers you need to know for 1031 Exchanges?

Understanding the 1031 exchange tax calculations opens the door to executing tax & financial strategy for superior outcomes. So, follow along and reap the benefits!

▶️Rule No. 1 - What's needed to avoid taxation:
To completely avoid taxes at the time of 1031 exchange, both the VALUE and EQUITY in the replacement property must be at least equal to the VALUE and EQUITY in the relinquished property, unless offset by eligible "EXCHANGE EXPENSES."

▶️Rule No. 2 - 1031 Taxable Gain Recognition:
To the extent that either VALUE or EQUITY in replacement property is less than VALUE or EQUITY in the relinquished property, you are taxed on the GREATER OF:
the trade down in value (minus exchange expenses) and
the trade down in equity (minus exchange expenses).
BUT, only up to the amount of gain realized through the 1031 exchange.

▶️Rule No. 3 - Replacement Property Tax Basis:
Your tax basis in replacement property equals the FMV (i.e., purchase price), less the amount of gain deferred through the 1031 exchange.

How does a trade down in equity happen?🤷‍♀️
A trade down in equity happens when an exhangor receives 1031 "boot" - some form of proceeds from the relinquished property sale that is not like-kind replacement property. This may be cash, a note, or other property that does not qualify as like-kind replacement property in the exchange.

How does a trade down in value happen?🤷‍♀️
A trade down in value happens when an exhangor acquires replacement property of lesser value than the relinquished property by reinvesting all of the equity from the relinquished property but incurring less debt for the replacement property than the amount of the relinquished property debt. In such a case, there will be a trade down in value, but not in equity.

So, what are EXCHANGE EXPENSES that reduce taxable gain? Stay Tuned!🎧

05/07/2024

Till Exchange Do us Part💍

Partnerships can do 1031 exchanges.😁 Partners can not.🥺

So, when partners want to sell and part ways, can they get 1031 exchange tax benefits?🤷

Thankfully, there are many options available.🥳 The appropriate one for each scenario depends on its unique set of tax and financial circumstances.

Tax Geeks will, rightfully, point out that this stuff can get super-complex. Still, helpful for us all to know what the options are.😎

▶️Partner Buy-Out: The partners/partnership buy out the partners that desire to cash out. This can be done pre- or post-exchange.

▶️Swap and Drop: The partnership continues through the exchange and, post-exchange, replacement property is distributed to cash-out partners who may sell it to generate their desired cash.

▶️Drop and Swap: In a Drop and Swap the partnership is terminated and the partnership distributes its property to the partners pro rata as co-tenants. Each TIC owner may then freely and independently cash out or exchange, as they desire.

▶️Partial Drop and Swap: Distribute Tenancy-in-Common ("TIC") interests to the cash-out partners in a redemption of their partnership interests. The partnership then does the exchange.

▶️Partnership Division: The partnership undergoes a "partnership division" and divides into two separate partnerships, each owned by at least two of the partners. If a new partnership contains partners, who together, owned more than 50% of the original partnership, it is deemed to be a continuation of the original partnership.

▶️Asset tracking: The original partnership continues and executes the exchange, acquiring as replacement property the respective separate assets desired by the respective partners. The partnership agreement is amended to disproportionately allocate the respective income/loss from the properties, so that each of the partners is allocated income/loss from their desired 1031 replacement property.

▶️Electing out of Subchapter K partnership tax regime: Partnership taxation is governed by subchapter K and §761(a) authorizes the IRS to permit members of an unincorporated organization to elect out of all or part of subchapter K.

▶️Installment Note Distribution ("PIN Transaction"): The partnership sells the property for a mix of cash and seller carryback note, eligible for installment sale tax treatment. Prior to receiving any payments on the note, the partnership distributes the note to the partner cashing out, who receives payments on the installment note and recognizes gain. The partnership goes on to acquire replacement property with the cash proceeds received from the sale of the relinquished property.

▶️Synthetic Drop and Swap: Conversion to DST, followed by independent exchanges or cash-outs

Did I leave anything out? Want more info about any of these? Have some critical feedback? Please let me know!🙏