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1031 Exchange Investment Tips in Dallas, Texas

1031 Exchange Investment in Dallas, Texas | 1031 Exchange Tips & Rules

An American taxpayer or real estate investor who is planning the sale of a property must be ready to lose a certain percentage of the profit to the government. This is sad for most people as they have to lose part of their money to the government as capital gains tax. Let’s discuss 1031 Exchange Investment in Dallas.

Capital gains tax could be as high as 15% to 30% of the profit you made from the sale of your property. To avoid losing such amount, it is wise to use an investment strategy that prevents you from paying capital gains tax.

As a real estate investor or someone interested in buying properties or 1031 Exchange Investment in Dallas, you can acquire several properties without losing money on capital gains tax.

1031 exchange is a powerful tool or strategy to use in purchasing properties without paying tax. It is one of the best ways real estate investors and taxpayers can acquire properties and maximize their investments.

The 1031 Exchange has been cited as one of the most powerful wealth-building tool available to taxpayers and real estate investors.

 What is 1031 Exchange

The 1031 exchange took its name from Section 1031 of the United States Internal Revenue Code. It is a rule that allows a taxpayer to sell income, investment or business property and replace it with a like-kind property. It is a way which a taxpayer can defer payment of capital gains taxes on the profit made from selling an investment property.

The capital gains from the sale of an investment property are deferred as long as the rules binding the 1031 exchange are upheld.  In theory, an investor could continue deferring capital gains on investment properties until death, potentially avoiding paying capital gains taxes on all his/her properties.

This means you can rollover the profit from one investment property into purchasing another like-kind property and so on until death without paying capital gains on any of the property. You only pay capital gains tax when you decide to sell the properties for cash after several years.

What types of properties are known as like-kind?

For a property to qualify as an exchange property, it must be an investment property. An investment property is a property that is held and used for investment purposes. They are properties that are bought for the sole purpose of making profits.

Examples of investment properties are commercial buildings, office building, malls, apartment buildings, industrial buildings, warehouses, and other types of buildings used for businesses.

A residential building for private use is not used for an exchange. A vacation home or a family house is not a valid property for an exchange.

Like-kind properties must not be the same kind of properties. Most people get it wrong thinking that like-kind properties must be exactly the same type of properties.

The following properties can be exchanged as like-kind properties:

  • Land can be exchanged for a shopping center
  • A land can be exchanged for an industrial building
  • A shopping center can be exchanged for an office building
  • An apartment building can be exchanged for an industrial building
  • A single-family rental home can be exchanged for a multi-family rental home
  • Land can be exchanged for an apartment building

You can exchange any investment property for another provided that the profit made from selling the original property is the same or lower than the cost of the replacement property. If the cost of the replacement property is lower than the profit made from the sale of the original property, you will have to pay capital gains tax on the balance amount of the profit.

1031 Exchange rules

These are rules that must be followed for the exchange to be valid. If you do not follow these rules, the exchange may not be valid.

  1. Both properties (original and replacement) must be investment properties

1031 exchange only applies to investment properties. The properties must be for business use only. Properties such as office buildings, apartment buildings, commercial buildings, lands, warehouses, hotels, malls, and so on. A residential building for tenants is also regarded as investment properties so long as you and your family are not occupying the building.

  1. Both properties must be like-kind

Like-kind properties are properties of the same type. This means an investment property exchanged for another investment property is like-kind. Different kinds of investment properties can be exchanged for another. For example, a shopping complex can be exchanged for a warehouse.

  1. You must be the owner of the property for at least a year

You must be the owner of an investment property for at least a year before you can sell it for an exchange. A property owned for less than a year may not be valid for an exchange.

  1. The replacement property must be identified within 45 days

After you have sold your property, a replacement property must be identified within 45 days. Your intermediary must be notified with a legal form that proves the availability of the replacement property within the given period. The rule allows you to identify multiple replacement properties within the given period as long as one of the properties is eventually purchased.

  1. You must purchase replacement property within 180 days or 6 months

The 180 days’ rule state that replacement property must be purchased within 180 days for the exchange to be valid. This means that from the day you sold your property, you have 180 days to purchase a replacement property. You should also know that the money you made from the sale of your property will be withheld by an intermediary. The intermediary will only release the money to you when you want to pay for the replacement property.

  1. The name on the original property must be the same with the name on the replacement property

The name in the documents used in selling original property must be the same name used in the documents used in purchasing the replacement property

  1. The cost or value of the replacement property must be the same or more than the profit from the original property

The cost of the replacement property must be the same or more than the profit acquired from the sale of the original property. If you have leftover cash after purchasing a replacement property, you will most likely pay capital gains tax on the balance cash.

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1031 Exchange Investment in Frisco, Texas

1031 Exchange Investment in Frisco, Texas | 1031 Exchange Tips & Rules

Real estate investors are constantly looking for better investment opportunities. There is a good investment strategy with which a real estate investor can sell and purchase real estate properties in Frisco Texas without paying taxes on capital gains. Here we discuss 1031 Exchange Investment in Frisco.

This strategy is known as the 1031 exchange. This is an investment strategy that most real estate investors and property buyers are using to acquire more properties without losing income on capital gains taxes.

As a real estate investor or taxpayer looking to buy properties or 1031 Exchange Investment in Frisco, you can maximize your revenue by using the 1031 exchange in acquiring investment properties. 

What is 1031 Exchange?

1031 exchange also known as the like-kind exchange is a rule in the United States Internal Revenue Code that allows one investment property to be swapped for another.

It allows an investor or a property owner to sell a property and use the profit acquired from the sale of the property in buying another like-kind property.

This means you purchase another property with the proceeds from another property without cashing out. All the profits go into the purchase of another like-kind property.

1031 exchange is a way to defer payment of capital gains taxes on properties acquired. It allows your real estate investments to continue to grow tax-deferred.

This means you won’t have to pay immediate taxes on capital gains. You will only need to pay taxes when you want to sell your investment properties for cash after so many years.

1031 exchange allows you to roll over the gain from one investment property to another, and so on until you want to sell for cash. However, you can keep the cash amount you use in purchasing the original property, you only can’t keep the profits.

For example, if you purchase a rental building for $500,000 and you sold it after 4 years for $700,000, you have made a profit of $200,000.

According to the rule, you can keep the $500,000 you used to buy the property 4 years ago but you will have to pay capital gains tax on the $200,000 profit. A capital gain tax could be 15% to 30% of the $200,000 profit.

To defer paying capital gains tax, you will have to use the $200,000 in purchasing a like-kind property of equal or greater value. This means the replacement property must be worth $200,000 or above to defer payment.

If the replacement property is lower than $200,000, you may have to pay capital gains tax on the balance profit.

1031 Exchange Tips and rules

1031 Exchange is binding by special rules which must be followed for the exchange to be valid. You most likely will need the services of a professional legal practitioner or experts in real estate investments and 1031 exchange to help you through the journey.

However, we are going to show you the rules and things you should know to help you through your exchange.

  1. Both properties (relinquished and replacement) must be investment properties

1031 exchange only applies to investment properties. It does not apply to properties for personal use. Investment properties are properties such as commercial buildings, office complexes, warehouses, hotels, condominiums, rental apartments, etc.

Your primary residence, vacation homes or other buildings for personal use do not apply with 1031 exchange. Both properties must be investment properties for productive use in a trade or business purposes.

  1. Both properties must be like-kind

Like-kind properties are two properties or assets that are of the same type. The two properties must be for investment purposes. The rule is liberal, however, there are strict time constraints that must be met.

You can exchange different types of investment properties for another. For example:

  • You can exchange a shopping center for land
  • You can exchange an apartment building for an industrial building
  • You can exchange an office building for a shopping center
  • You can exchange a single-family rental home for a multi-family rental home.
  • You can exchange land for industrial building
  • You can exchange a warehouse for an apartment building.
  1. The replacement property must be identified within 45 days

This is one of the key time limits that must be followed in the 1031 exchange. You must identify a replacement property within 45 days of selling your property.

You must tender a legal form to your intermediary to proof that you have gotten a replacement property within 45 days. You can identify multiple replacement properties as long as you eventually purchase one of them within the purchase time limit.

Also, the market value of the replacement properties should not be more than 200% of the market value of the original property/properties sold.

  1. You must purchase replacement property within 180 days or 6 months

This is the second time limits that apply to 1031 exchange. It states that you have 6 months or 180 days to close the purchase of a replacement property after selling your property.

After selling your property, an intermediary with be in possession of the cash until you close the purchase of a replacement property. The money will be in an escrow account or withheld by the intermediary.

After the replacement property documents have all been drafted, the intermediary will then release the money to you for the payment of the replacement property. All these should be done within 180 days for the exchange to be valid.

  1. You must be the owner of the property for at least a year

For a property to be qualified for a 1031 exchange, you must possess ownership the property for at least a year.

  1. The value of the replacement property must be the same or more than the proceeds from the original property

This means that there must be no leftover cash after the purchase of the replacement property. You must use all the profits you made from the original property into purchasing replacement property. Any leftover cash will be taxed as partials sales proceeds.

  1. The name on the original property and the replacement property must be the same

The same name you used in buying the original property must be the same name used in buying the replacement property.

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1031 Exchange Investment in Plano, Texas

1031 Exchange Investment in Plano, Texas | Rules binding 1031 Exchange

Do you know that as a real estate investor you can buy properties in Plano without paying capital gains taxes? You can purchase a like-kind property after the sale of another property without making extra cash payments. Here we discuss 1031 Exchange Investment in Plano.

With 1031 Exchange rule, you can purchase a like-kind property from the proceeds of another property without paying capital gain tax.

If you are selling or purchasing an investment property, business property or income-producing real estate in Plano, you are qualified for the 1031 exchange rule.

Using the 1031 exchange to acquire properties in Plano, is a profitable and good investment strategy. You can acquire properties without paying capital gains taxes on those properties.

What is the 1031 Exchange?

1031 exchange is a rule under the United States Internal Revenue Code (IRC) Section 1031 that states that a property investor or taxpayer can defer paying capital gains taxes on a property sold by using the proceeds in the purchase of the like-kind property.

However, the property must be an investment property, business property or income-producing real estate. It does not apply to properties for personal use.

The rule allows an investor to swap property for another like-kind property that is of equal or greater value.

It means you can exchange your property with another property without cashing out or realizing capital gains.

How does the 1031 Exchange works?

1031 exchange has several rules that bind it. You need to meet up with the rules for the 1031 exchange to be actualized.

Let’s take, for example, you buy an investment property for $500,000 and sold it after 10 years for $800,000. Your profit or capital gain is $300,000. Normally, you are expected to pay capital gain tax on the $300,000 profit you made. The capital gain tax could be 15% or 20% of the profit.

However, you can avoid paying the capital gain tax using the 1031 exchange. You can do this by buying a like-kind property using the profit of $300,000 you made selling your original property. The like-kind property must be valued at $300,000 or more.

By purchasing a like-kind property, you won’t need to pay capital gains on the $300,000 profit you made any longer.

If you buy a like-kind property with the $300,000 profit and after another 5 years you sold the property for $500,000, you have made a profit of $200,000. You can still use the profit of $200,000 to buy another like-kind property without paying capital gains taxes.

Hence, 1031 exchange allows you to own several investment properties without paying capital gain taxes.

However, there is a time limit. You must sell the original property and buy replacement property within 180 days.

Rules binding 1031 Exchange

There are rules binding 1031 exchange which must be followed. The rules are:

  • The properties must be investment properties. Both the original property sold and the replacement property must be investment properties. This means you can’t purchase a property for private use.

The 1031 exchange does not apply if you purchase a home where you will be living with your family. You can buy a property for rentals, commercial buildings, and other kinds of investment properties.

  • You must be the owner of the property for at least a year before selling the property. This means that you must possess the ownership of a property for at least one year before you can sell it for a replacement property.

If you own a property for less than a year, the 1031 exchange does not apply to it.

  • The original property sold and the replacement property must be like-kind. Two assets that are considered to be the same type is referred to as like-kind property. The two assets must be of the same kind but not necessarily of the same quality.

For example, a single-family property and a multi-family property are referred to as like-kind properties. The proceeds from a single-family property can be used to purchase a multi-family property under the 1031 exchange.

  • The value of the replacement property must be equal or greater than the capital gains made from selling the original property.

For example, if you made a profit of $300,000 from selling a property, you must buy a replacement property that cost $300,000 or more. You cannot buy a property that is lower than the profit you made.

  • The replacement property must be purchased within the 180 days’ limit. For the exchange to be valid, you must finalize the purchase of replacement property within 180 days of selling the original property.

If you do not finalize the purchase of replacement property within 180 days, the exchange is unlikely to be allowed. For this reason, you should secure a replacement property before selling your property to be on the safer side.

  • You must identify a replacement property within 45 days after selling the original property. This means that within 45 days after selling your property, you must tender a legal form that identifies the availability of a replacement property.

It is best to secure a replacement property before selling your property since you have just 45 days to identify a replacement property.

  • Both the original property and the like-kind property must be sold and bought in the same name. The name on the original property must be the same name on the replacement property.
  • All the profits made from selling the original property must be used to purchase the replacement property. This means you cannot keep any amount of the profit you made from selling the original property.

If the amount you used in buying the replacement property is lower than the profit you made, you may be required to pay some capital gains tax.

Are there any Drawbacks to 1031 Exchange?

You are only allowed to pay capital gains tax on a property when you make a profit from selling the property. If you suffer a loss from selling a property, you will most certainly want to recognize the loss on your taxes. If you suffer a loss, it means you can’t use the 1031 exchange.

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Ultimate Guide to Real Estate investment Dallas

Real Estate investment Dallas | Real Estate Returns and growth

Are you considering investing in real estate? Real estate investing is considered one of the best and most profiting investing. It has good potential returns on investment. It is almost impossible to go at a loss when you invest in real estate. Let’s discuss Real Estate investment Dallas.

Most people that want to invest in real estate are faced with the dilemma of finding the right location or area to buy properties. Purchasing a property in a wrong location can lead to a loss or a low return of investment.

Knowing the cities with good prospects and with potentials to maximize profit is very important. This is why before investing in any property, you should first make adequate research to know which area and cities with potentials to maximize good returns on investment.

Dallas real estate market is booming with great returns on investment. It is a market where you should very much consider investing on. Dallas real estate market has grown in recent times both in the increase of population and economic growth.

Dallas is a city where around 600 people relocated into every day. This shows a great opportunity for property investment as people will need homes to live in. Dallas is a choice location for a lot of people and this has made the city a great investment hub for property investors and home buyers.

5 reasons to invest in Dallas Real Estate Market

Dallas is home for both locals and foreigners. It is a choice location for a lot of people. The growth of its population and economy has made it a seller’s market for real estate. Investing in real estate in Dallas is a good choice you should make.

Let’s take a look at some of the reasons why you should invest in real estate in Dallas:

  1. Tax benefits

Tax payment on properties is one of the factors that can drive away investors from investing in properties in a particular location. Investing in real estate in Dallas reduces or eliminate taxes on properties.

Investing in properties and treating your investments as a business will enable you to eliminate expenses you would have incurred. Expenses including property taxes, travel fees, and repair costs can all be eliminated.

You can also avoid paying capital gains taxes on properties with 1031 exchange. It allows you to purchase like-kind property with the proceeds from the sale of another property. Buying properties with 1031 exchange helps to eliminate the payment of taxes on properties sold.

Buying properties in an Opportunity Zone allows you to defer payment of capital gains taxes.

  1. Population Growth and Economic Growth

Dallas is growing at a fast pace with about 600 people relocating to Dallas daily. Dallas is the 4th most populous metropolitan area in the United States.

It is expected that 50,000 new single-family homes and 50,000 new apartments will be built in Dallas County in the next three years.

With a 4% annual economic growth over the past years, Dallas has experienced a significant increase in population. Dallas had its roots in small-scale farming which has been boosted by oil business.

It has become an urban cultural and business center. Dallas real estate market is expanding daily, which is why more homes are needed to accommodate its populace.

Dallas is fast becoming a hub for business and as more people are relocating to the city, more homes are needed which is very beneficial for real estate investors.

  1. Job markets and high employment rates

Dallas has been ranked 2nd in the job market growth in the United States with over 500,000 jobs created over the recent years. The average salary in Dallas is rising to about $60,000 annually. This has resulted in the financial stability of people living and working in Dallas.

The high rate of employment, good economy and financial strength of its populace has made the city a great location for real estate investment.

With a GDP of about $450 billion, Dallas is ranked 6th in the best GDP in the United States. With people having good jobs and earn better wages, they can buy properties and pay rentals. They can spend more money on buying properties from investors.

Availability of jobs in Dallas helps to create a good economy and it is expected to increase in the future.

Dallas is ranked at 1st in the overall commercial real estate demand in the United States. This means that the demand for properties both commercial and residential is very high in Dallas.

  1. High rent to home price ratio

The ratio of the residential rental to home prices in the Dallas housing market is 16:1. This means that in 16 years, a property owner can get full return on the value of his/her property.

This is the highest-ranked property return in the United States. Also, the selling prices of commercial properties such as industrial, retail and offices all cost above the normal rates in Dallas.

  1. Growth of Airbnb

Airbnb (Air bed and breakfast) is an online-based market for renting properties. Foreigners, immigrants, and people relocating to Dallas can rent properties and accommodations through the platform.

On bookings, it takes a 3% commission and the balance payment goes to the homeowner. A lot of people uses the platform and Airbnb has recorded remarkable growth in Dallas over the years.

The growth of Airbnb has indicated that a lot of people are moving into Dallas and they need accommodation. Dallas is among the cities with the highest vacation rental services.

Hence, as a property investor, it will be wise to invest in property in Dallas due to the high demand for accommodations to rent. The value of your property will continue to rise due to the increase in demand.

Dallas Real Estate investment returns and growth 

The median value per square foot of homes in Dallas is $205, which is higher than the Dallas-Fort Worth-Arlington Metro average of $137.

The median cost of homes right now recorded in Dallas is $379,900. The lease cost in Dallas is $1,618, which is lower than the Dallas-Fort Worth-Arlington Metro median of $1,695.

Dallas housing market in 2019 is one of the strongest markets in the United States. In spite of certain changes in the market, demands and sales have kept on moving at a high pace for over two years with no indications of halting.

Dallas real estate market figure for the year ending with the third Quarter of 2019 is certain. This is according to LittleBigHomes.com. The Accuracy of the Trend Projection for Dallas is 82%.

In like manner, they estimated the likelihood of rising home costs in Dallas at 82% during this period. If this Dallas Housing Market Forecast is right, home costs in Dallas will be higher in the third quarter of 2019 than they were in the third quarter of 2018.

Dallas housing market for the next 3 years ending with the third quarter of 2021 is also positive. The Accuracy of the Trend Prediction for Dallas is 76%. It is estimated that the probability of rising home costs in Dallas is 76% within this period. If this is correct, home values will be higher in the third quarter of 2021 than they were in the third quarter of 2018.

2018 was extraordinary for the Dallas real estate market in terms of increment in the value and prices of homes. This pattern is required to continue in 2019. As indicated by Zillow, home estimations in the Dallas-Fort Worth-Arlington Metro became 14.3% over the previous year. Besides, Zillow predicts that costs will yield another 11.2% the next year. In this manner, if you invest in property now, your investment will yield significant profit in the next year.

What’s more, recollect that the Dallas housing market is anticipated to have an increasing rental demand. This is going to drive up rental costs, hence making your investment more profitable.

As indicated by Mashvisor’s data and analysis, the median home cost in Dallas is $423,768. This cost is above the United States national value. However, it is reasonable as Dallas is one of the top real estate markets in the United States.

Comparing with the real estate market in Los Angeles ($932,371), Miami ($663,700), Boston ($855,693), and Austin ($518,686), the cost is relatively lower in Dallas.

How to Invest in Turnkey real estate in Dallas

Turn-key real estate investing in Dallas is a way to invest in real estate and minimize investment risk.

Turn-key real estate investing is when you buy a property that doesn’t require additional investments, already has a paying tenant, and likely has ongoing management. It means investing in an already-made property where you don’t need to incur extra expenses in renovations and management of the property.

Investing in Turnkey real estate in Dallas offers many benefits and reduces investment risk or losses.

When you invest in Turn-key real estate, you most likely have income already coming in on the property. A Turn-key property most likely already have a tenant. This means that when you purchase a property, your tenant pays a significant part or all of the mortgage for you.

For example, you purchase a property for $200,000 and your mortgage is $1200 per month. If you have a tenant already occupying the property and pay monthly rentals of $1,200 or $1,000, this means you don’t get to pay the mortgage with your money or you only pay a little amount of the mortgage.

Investing in Turn-key real estate in Dallas offers you more control over your investment. You can either choose to manage the property by yourself or hire a property management company to manage the property on your behalf.

Before you invest in Turn-key properties in Dallas, you need to first make adequate research. You need to know the Dallas home buying process.

We will show you steps to guide you through the purchasing process of buying a Turn-key property in Dallas.

Step 1: Determine your housing needs and budget

Before purchasing a property, you need to determine your needs and know the kind of property you want. Have a list of the size of property you want, the facilities and nature of the property.

Also, your budget is very important when investing in properties. Your budget will determine the size and nature of the property. If you want a bigger-sized house or a luxury home, you should expect a higher budget.

Step 2: Get pre-approved for a mortgage

Get pre-approved for a mortgage to find out what price or cost of a property you can afford. Meet with the right lender and provide necessary financial documents so they can estimate the mortgage amount that you can afford.

Step 3: Meet the right real estate agent

When planning on purchasing a turn-key property in Dallas, you must find the right real estate agent. The right real estate agent will help you through the process of finding a good property and guide you through the purchase process.

The right real estate agent will make your investment process as easy as possible. A good real estate agent will likely recommend a good mortgage lender to you and walk with you through your investment journey from the beginning to the end.

Step 4: Begin your property search

Searching for the right property to buy in Dallas requires a lot of research. You can search through reputable property listing online. Check different property listings in Dallas for your choice property with the features you want and within your budget. You can also sign up on these property websites to get alerts and notifications for available properties that fit into your desire and budget.

If you do not have the time or experience in searching for the right properties, you can make use of a reputable real estate agent. Your real estate agent will show you different properties that fit into what you want and your budget. To be on the safer side, it is best to use a reputable real estate agent when searching for a property to buy in Dallas.

Step 5: Inspect the property

After finding a property you want to purchase, you must go inspect the property. This is to make sure that the property is actually what it is in photos. It is also necessary to inspect properties so you don’t fall into the hands of scammers. You need to be sure that the property is real and in good condition.

Step 6: Make an offer to buy the property

After negotiating the price with the property seller, make the seller know that you are serious about purchasing the property by making an offer. You can deposit some amount of money upfront or into an escrow account. You should also have your mortgage pre-approval letter ready to show to the seller.

Step 7: Fill out Paperwork

Fill out all the paperwork that legally binds the purchase contract. You may need the services of a legal practitioner to sign the papers and to ensure that all paperwork is authentic and binding the contract. Your real estate agent can also help you handle all the paperwork.

Step 8: Finance your property

This is where you provide a financial plan on how you will pay for the property. Determine the amount you want to pay for your mortgage monthly. The mortgage lender may calculate the amount you need to pay every month or you can calculate your monthly mortgage payments based on the amount loaned, number of years and interest rate.

Step 9: Closing

After you have signed all the paperwork and financed the property, you have secured ownership of the property. You may need to hire a property management company to manage the property for you or manage the property by yourself.

1031 Exchange Real Estate Investment in Dallas

To prevent paying tax on capital gains on investment properties, you can purchase like-kind properties in Dallas using 1031 exchange.

1031 exchange is a tax exemption rule granted in the IRS tax code that states that individuals can defer pay capital gain taxes or other taxes associated with the sale of a property if the proceeds from the sale of the property is reinvested into the purchase of a like-kind property of equal or greater value within a limited time frame, usually within 180 days.

If you sell an investment property and use the profit you made from selling the property to purchase a like-kind property, you can defer paying capital gains tax on the profits made.

For example, if you purchase a rental home for $200k and after some years you sold the property for $500k, you have made a profit of $300k. Under the 1031 exchange rule, if you use the $300k profit to purchase a like-kind property within the time limit, you won’t have to pay capital gains tax on the profit.

1031 exchange has rules binding it which includes:

  • The property must be an investment property. You can’t purchase a property for private use
  • You must hold ownership of the property of at least a year
  • The properties sold and bought must be like-kind
  • You must buy another replacement property within the 180 days’ limit.
  • You must identify another replacement property to buy within 45 days after selling the original property.
  • Both the original property and the like-kind property must be sold and bought in the same name.
  • All the profits made from selling the original property must be used to purchase the replacement property.

Medical Real Estate Investment Dallas

Investing in medical real estate in Dallas has become an increasingly profitable investment.

Investing in medical real estate in Dallas is probably the most brilliant move you can make today as an investor.

In addition to the fact that healthcare is a service everybody needs, it’s likewise a part sponsored by statistic development. Consistently, 10,000 Americans turn 65.

In several years to come, aging Baby Boomers will need more specialty housing and medical facilities This implies that the healthcare sector must continue to grow no matter the situation of the economy.

Investing in a medical real estate creates a completely passive investment profit. The tenant of the property is completely in charge of the management and ownership costs of the property.

Long-term leases of the property are backed by a regional hospital’s financial strength which helps to reduce investment risk.

A report from JLL stated that medical office has consistently offered a 2% spread in cap rates over other risk-similar investments.

Where medical offices are offering median cap rates of 6.7%, other offices and the S&P 500 Dividend Yield are offering cap rates of 4.2% and 3.0% respectively. This means that investors make more profits investing in medical properties.

Investing in medical real estate in Dallas has become increasingly profitable and irresistible to investors. As an investor, investing in medical real estate in Dallas is a profitable investment.

To go into medical real estate investment in Dallas, look for a reputable real estate agent that specializes in the business of healthcare and healthcare real estate in Dallas.

The real estate agent will guide you through the process of searching for a good medical property to buy, financing and legal documentations.

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Airbnb hosting & Airbnb Property Management in Dallas & Fort Worth

Airbnb hosting & Airbnb Property Management in Dallas & Fort Worth

Don’t know where to find the perfect place to stay in Dallas or Fort Worth? Don’t worry, I’ll teach you how to find the best accommodation deals in these places using Airbnb.
What you’ll learn:

  • Airbnb Hosting in Dallas and Fort Worth: Finding the Best Place to Stay
  • Airbnb Hosting in Dallas and Fort Worth: 3 Advantages Revealed
  • How to Utilize the Airbnb Dallas and Fort Worth Portals (COMPLETE Tutorial)
  • Airbnb Property Management in Dallas & Fort Worth
  • How to Choose the Right Airbnb Property Management Provider

Airbnb Hosting in Dallas and Fort Worth: Finding the Best Place to Stay

Airbnb is an online marketplace portal that advertises available home-for-rent and other leasable spaces within a particular area to serve travelers. Currently, Airbnb actively operates in 65,000 cities and 191 countries.

If you are in Texas and found no place to stay overnight, you can check the Airbnb hosting in Dallas for temporary accommodation. If you want to spend the night in Fort Worth, you can also visit the Airbnb listing in Fort Worth here to find the best places to check in.

Airbnb Hosting in Dallas and Fort Worth: 3 Advantages Revealed

1. Property Posting:

If you want to advertise your property in Dallas or Fort Worth as a subject for a lease, you can post a listing on Airbnb for FREE.

The portal will only earn once a client reserved your property. After the confirmation of the booking, the Airbnb would ask for a 6-12% service fee from the client that is completely non- refundable.

2. Guest Gains:

One of the advantages of using the Airbnb service is the opportunity to select the perfect space since the portal would display a wide array of suggestions. You can even filter the results, like changing the language, setting the preferred type of amenities, and even grouping the result by rates.

Recently, the Airbnb also made a service expansion to cater the demands of the clients, such as adding restaurants and leisure parks.

3. Protection:

The Airbnb cannot provide a full assurance that your property would be free from any client- inflicted damage. To safeguard your property, you may require a Security Deposit to the guest before he or she can complete the reservation. Through the Security Deposit, the guest agrees to shoulder any property damages within his or her stay.

How to Utilize the Airbnb Dallas and Fort Worth Portals (COMPLETE Tutorial)

1. Book Early:

If you want to find the best place to stay while you are in Dallas or Fort Worth, you must book days or weeks ahead of time.

Here are the steps to place your early booking on Airbnb:

  • Install the Airbnb app or visit the Airbnb.com. Keep in mind that there’s no third- party domain for all the Airbnb transactions.
  • Enter your personal details. This may include the number of clients or guests, dates, and destination.
  • Select the type of room that you wish to rent. You can choose from the shared room, private room, or an entire home. You can also use the ‘Filters’ option to make the suggestions more specific.
  • After determining the specific type of home, the next thing that you must do is to click the ‘Contact Host’ if you want to ask some questions to the owner. If you want to proceed with the booking, just hover directly to the ‘Request to Book’ tab.
  • If you are new to Airbnb, you need to create an account before you can completely book a property

2. Examine the Location
3. Read Several Reviews for Your Reference
4. Check the Identity and the Veracity of the Host
5. Send an Email or Private Message to the Host
6. Check the Cancellation Policy and the Fine Print
7. Look for any Rate Adjustments for Longer Stays
8. Verify the Location of the Property
9. Place a Deal on Airbnb Portal

Airbnb Property Management in Dallas & Fort Worth

If you want to gain high profit in listing properties in Airbnb in Dallas or Fort Worth, it’s time for you to tap an Airbnb Property Management team.

What’s the use of employing Airbnb Property Management?

It’s for one thing- to WIN in the competition!

You cannot just get confident after posting stunning photos of your property on the website, much more that you cannot expect positive results by just furnishing your listed vacation house with the complete amenities.

What you need is a reliable Airbnb Property Management team that will do the job in maintaining your rental houses, such as processing of new reservations, facilitates checking in of guests, replenishing household supplies, and cleaning the entire property.

The Airbnb Property Management team would also ensure that the standards that you set are always met. This way, you will get more guests, not only from Dallas or Fort Worth but from other states and cities as well.

You’ll employ a property management team to make sure that the guests are fully satisfied with your property and would head back for another booking soon.

How to Choose the Right Airbnb Property Management Provider

  • Consult Search Engines:

To determine the most reliable Airbnb Property Management manager or provider, entering simple keywords on search engines would help. Consider the top three suggestions since they are the most reliable service providers based on guests’ reviews and Google algorithm.

  • Don’t Focus Much on Photos:

Instead of focusing on beautiful photos, make sure to read several reviews of a particular property management provider. Especially, that you are doing business in Dallas and Fort Worth wherein the competition is so high.

  • Check What You’ll get After Payment:

You need to ask the provider regarding the specific service or task covered in a particular contract or deal. Be careful with people who offer much out of a lower rate, most of these people are just hoax.

  • Set Your Priorities:

It is important to immediately inform your property management team regarding the specific area that you would like to improve. If you are after for the cleanliness of your property, make sure to tap the help of a provider that is known for such forte.

  • Talk:

You need to establish a firm relationship with the people, who will later on, do some significant maintenance to your property. You can compare your conversations with the Airbnb property management in Fort Worth with the one in Dallas and decide which of the two is the best pick.

Hope you get a lot of information regarding Airbnb in this article.

SHARE your thoughts now in the comment section.

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Passive Income Real Estate Investing in Dallas & Fort Worth

Passive Income Real Estate Investing in Dallas

Do you want to know how to earn from passive income real estate investing in Dallas?

Well, you landed on the right page. Today, I’ll tell you all the information regarding passive income, real estate investing, and other good things in Dallas, TX!

I’ll cover the following topics:

  1. Passive Income Real Estate Investing in Dallas: Why Invest in Dallas, TX
  2. How to Buy An Investment Property in Dallas
  3. Things to Know About Investing in Turnkey Real Estate in Dallas
  4. Benefits of Passive Income Real Estate Investing in Dallas
  5. How to find a property in Dallas for Passive real estate income

Let’s start!

Passive Income Real Estate Investing in Dallas: Why Invest in Dallas, TX

Real Estate Investing pertains to purchasing a property with the intention to gain a profit.

Investing in real estate is deemed to be one of the most ‘secured ways’ of earning money. This type of investment is ‘overwhelmingly stable’ that even during times of high inflation rate, is still invulnerable.

In fact, Robert Kiyosaki, financial expert and the founder of the Rich Dad Company, said that there’s money in investing in real estate even during a major market collapse.

If you want to engage in real estate business, you don’t need to lay a huge capital. Start investing in real estate for as low as $5,000 (partnership venture) or if you have enough capital, you can start at $50,000

Aside from stability and low amount of capital, real estate business could also bring the following advantages:

7 INCREDIBLE Advantages of Real Estate Investment (as told by the EXPERTS)

  • Passive Income:

This is the edge of investing in real estate; you can earn passive income while doing nothing at all.

Let say you acquire a rental property, expect a continuous cash flow even if you are sleeping or on a vacation. The property will generate an income for you without the need for close supervision and management.

  • Building Future Equity:

Equity or shareholder’s equity refers to the money that would be reimbursed to a shareholder after liquidating all the company’s assets and paying all the outstanding debt. In other words, equity is part and parcel of your net worth.

Upon completely paying your mortgage, you also built equity. And as you keep on adding equity, you can also have the leverage to procure more properties and eventually improve your cash flow.

  • Impact on the Community:

While it is true that the main objective of investing in a real estate property is to gain profit, there’s also a noble benefit of doing this- your impact on the community.

You can help people in the community by providing them affordable housing units. You also help propel the local economy through your tax revenues.

  • Perks of Owning a Physical Asset:

Since real estate capitalizes in the physical assets, you are not affected by any market crash. This kind of stability and protection make the real estate investment far way better than engaging in stocks and bond ventures.

  • Tax Benefits:

Aside from a sure way of growing your wealth, real estate can also do the tricks of lowering your tax bracket.

  • Provides Leverage and Easy to Finance:

Real estate assets are easy to finance. You are even allowed to borrow up to 90% of the total acquisition cost. In most cases, these acquisition costs are so attractive and usually fall below the expected investment return.

This process of augmenting the investment return with external financing is called positive leverage.

  • Real Estate Value Appreciates:

Another benefit of investing in real estate is that it surely appreciates over time. The value of real estate properties mainly augments for two reasons:

  1. As the number of people who are interested to bid in a real estate venture increases, the yield or cap rate also goes up.
  2. With the rapid increase in construction cost and high demand of house rental, the rates of the real property establishments also increase.

Do you know that you can earn passive income if you invest in real estate in Dallas?

Here’s why.

Passive income is an earning from a limited partnership, rental property, or other enterprises in which a particular person is not directly involved. One of the best ways to earn passive income is through investing in real property.

Now, if you are searching for the best place to put up your real estate business and generate a passive income, you have to consider Dallas.

The population of Dallas, from 2010- 2015, exponentially grew, hence, opening rental apartments and other real property establishments in the city is a sure hit.

You can check some of the Dallas real estate investment firms if you have more questions regarding the status of the rental industry in Dallas.

Another reason why Dallas is best to set your real estate business is its financial stability. In retrospect, Dallas handled the last recession and continues to front a strong economy for the last five years.

You are also assured of the continuous influx of tenants in this city because most of the people who decided to move in Texas preferred to settle in Dallas.

Other reasons why you must invest in real estate in Dallas are the following:

  • According to a Forbes study, Dallas is the second fastest growing metropolis since 2016.
  • Dallas is the biggest city in Texas
  • Based on the Dallas real estate 2018 reports, there’s no reported case of profit loss in all of the real estate transaction in Dallas
  • Opened 661,000 new job vacancy since 2010 marking an all-time high job creation record in the entire US
  • Dallas is home to the world’s leading logistics centers
  • 26% of the total population of Dallas earns $100,000 of average annual income

With these reasons, it is safe to say that the right place to earn passive income in real estate investing is in Dallas, TX.

How to Buy An Investment Property in Dallas

Are you decided to buy an investment property in Dallas, TX? Or are you interested to engage in Dallas, Texas real estate market? The following information will make you equipped:

Based on the Dallas real estate market 2018 review, you have to perform the following preliminary measures before buying a property

  • Study the Market of Your Interest:

Study all the facets of the target market, including the ideal micro and macro investment sites. You also need to consider the A.B, C, D rating so as to fully understand the take of the people involved in your target market.

  • Create a Team:

Since you planned to earn passive income through investing in real estate, you need to build a great team. Remember, real estate is a team game so you need to recruit the brightest people in Dallas to help you win the game. These people will monitor, assess, and evaluate the performance of the business while you are away.

  • Establish Financial Stability:

While you can employ some sort of leverage (like debt) to procure a property, you still need to establish your financial stability as you go on with the business. If you want to learn how to handle debts and other financial tips, read here.

  • Save:

You need to have a stable financial portfolio if you want to succeed in real estate business. Though you can start with low capital, it would make a huge difference if early on; you already have enough backup accounts for any unprecedented events.

  • Get Leads:

Before you invest in real estate, make sure to get enough leads first. You need to research and find the best deals the market could offer for your business.

If you follow these preliminary measures, expect to get more favorable market deals. And from here, you will know the 5 steps of buying an investment property in Dallas.

5 Steps of Buying an Investment Property in Dallas, TX

1. Negotiation:

You need to negotiate with the owner or the seller of the property and offer a ‘win-win’ deal. In some cases, you might just be allowed to deal with a middleman, but still, do your best to come up with the best deal.

2. Due Diligence:

After entering a good deal, you have to observe the ‘due diligence’ time frame. Due diligence is simply the time allowance given to the buyer to inspect thoroughly the property that’s being sold. If major issues or problem is discovered, the buyer is allowed to retract the deal and void the contract.

3. Pre- Closing:

If you are fortunate enough to find no issues in the property within the due diligence period, the next step is the preparation to finally seal the deal. At this stage, you can prepare the request for a closing document and also the insurance title of the property.

4. Closing:

This includes the signing of documents, paying and receiving of funds, requesting for access keys, confirming the insurance, and taking photos to document the deal.

Things to Know About Investing in Turnkey Real Estate in Dallas

A turnkey property is deemed to be the ideal way to earn passive income in investing real property. This has something to do with purchasing a fully furnished property with an existing tenant.

You don’t need to drain yourself if you choose to invest in a turnkey property in Dallas, since majority of the people in the city are familiar with this type of arrangement.
Here are the things that you must know about investing in turnkey real estate property:

  • Before you engage to buy a turnkey property, make sure to ask the following questions: is the location convenient to the tenant? does the rate of the property match the status of the area’s market? do you want to hire a property manager or manage the tenants on your own? These questions are very important to address to check the feasibility of getting a higher return on investment.
  • Be aware that there are lots of fraudulent turnkey companies that sell a property for a low price and yet promise that you can get a high return of investment. To avoid deception, you must only deal with trusted people or those companies with a license to operate such business.

If you want to engage in turnkey investment, you must be willing to do extensive research. You need to understand the market status, also identify the areas where people are looking for turnkey properties.

If you live in Dallas, you can check the Dallas real estate analysis to get more information regarding the turnkey investment.

Benefits of Passive Income Real Estate Investing in Dallas

  • Steady Flow of Income:

Due to the financial and market stability of Dallas, investing in real estate there is a dependable source of passive income. In fact, real estate industry experts predict that Dallas will top as the best US city to put up a real estate investment.

  • Tax Benefits:

If you own a rental property, you are exempted from tax obligations. Tax exemption is the primary reason why investors preferred to align their track to real estate ventures.

Also, rental income is not taxable against the self-employment tax bracket if you engage in this type of endeavor.

  • Payment for Mortgage is Covered:

You cannot only maintain the property using the tenant’s payment, but you can settle your mortgage as well.

How to Find a Property in Dallas for Passive Real Estate Income

Investing in real estate is good, but how are you going to find a property in Dallas in which you can invest?

If you want to find the best places to invest in real estate in Dallas and eventually earn a passive income, I listed my five preferences below.

1. Dallas Properties in Coppell

  • Median Home Rate: $300,000
  • Median Rent: $1,100/month

2. Dallas University Park Properties

  • Median Home Rate: $1,000,000
  • Median Rent: $1,900/month

3. Dallas Investment Properties in Allen

  • Median Home Rate: $220,000
  • Median Rent: $1,300/month

4. Dallas Bluffview Properties

  • Median Home Rate: $600,000
  • Median Rent: $1,400/month

5. Dallas Lake Highlands Investment Properties

  • Median Home Rate: $280,000
  • Median Rent: $1,000/month

Do you find this article helpful?

Leave a comment below and let us know if you are interested to open a real estate business in Dallas soon.

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1031 Exchange for Doctors, Rules and Buying a Property

1031 Exchange for Doctors, Rules and Buying a Property

1031 Exchange for Doctors! Are you a doctor who wants to know the 1031 Exchange? No need for a real estate expert to explain this deal. Today is your lucky day since you’ll learn this tax-deferring trick for FREE!

Here are the things that you will learn after reading:

  • What is a 1031 Exchange?
  • How Doctors and Physicians can Benefit from 1031 Exchange.
  • What are the Rules of a 1031 Exchange 2019?
  • How Long do you Have to buy a Property With a 1031 Exchange?
  • How Many Properties can be Identified in a 1031 Exchange?
  • 1031 Exchange Steps

Let’s start by introducing the 1031 exchange for dummies!

  • What is a 1031 Exchange

The 1031 Exchange also called as Starker Exchange or Like-Kind Exchange is a procedure that allows an investor to sell or buy a ‘like- kind’ property without requiring immediate payment for the capital gains taxes.

However, prior to deferring the capital tax, the investor must first establish pieces of evidence proving that the capital used for the purchased of a new property is derived from the proceeds of previously owned ‘like- kind’ property.

This tax- deferring strategy is operating under the mandate of section 1031 of the IRS code; hence, the term ‘1031’ Exchange.

5 Advantages of 1031 Exchange (Finally Revealed)

1. Tax Scape:

This procedure is a ‘smooth’ way of skipping real property obligations, including capital gain, ordinary income, and depreciation taxes.

2. Augments Cash Flow for Reinvestment:

Deferring capital gain taxes would mean adding capital for purchasing a new ‘like- kind’ property. The savings would capacitate the investor to procure several properties with the hope of yielding positive Return of Investment (ROI).

3. Management Relief:

To keep yourself from getting burn out from high maintenance cost, 1031 would be your best ally. You can have a deal with another investor and exchange respective properties (without upfront payment of capital gain taxes) provided that the two properties operate under the same umbrella or industry.

4. Wealth Buildup and Asset Accumulation:

Real estate experts suggest that employing a 1031 Exchange strategy in running a business would actually mean yielding a high profit in the long run. Based on the reports of Breakwater Equity Partners, real estate investors who perform 1031 exchanges for decades would significantly increase their net worth and would pass the same financial stability to their successors.

5. Easy Changing of Property:

Under the provisions of the 1031 exchange, you are allowed to hover from one type of real estate property to another. Like for example if you want to swap your idle land lot to residential space.

  • How Doctors and Physicians can Benefits from 1031 Exchange

Medical practitioners would cut a large margin of their capital gain taxes once they master the 1031 Exchange rule.

For example, a team of US doctors built a hospital in 1993 amounting to $400,000 with a current fair assessment value of $1.2 million and under the sailing of $100,000 income tax obligations and then would like to expand and exchange it with a new and bigger facility.

If you target a $1.2 million selling price (of the old hospital building) you would get a $1.1 million sale’s profit ($1.2 million- $100,000).

If you carry out this deal, this would inflict a 15% federal tax rate. To avoid this huge tax liability, the management would rather prefer to engage in an exchange of property under the scope of the A71031 Exchange. With this scheme, the doctors would not only procure a larger facility but enjoy a $165,000 tax savings as well.

Medical practitioners can also utilize the 1031 Exchange rule to reduce the real estate selling price that would only benefit the clinic’s management. If they reduce the real estate liabilities, they can now top up the savings to their professional fee without compromising their original professional charge.

  • What are the Rules of a 1031 Exchange 2019

To qualify for 1031 Exchange, you need to consider the following rules:

1. Business or Investment Property Only.

You cannot avail the 1031 Exchange rule if you are dealing with personal property. Only swapping of business or investment properties are allowed under the provisions of section 1031 of the Internal Revenue Code.

Consider the following examples:

a. If you get married and decided to move residence to the place of your spouse, you are not allowed to swap your current primary residence for a rest house.

b. If you moved from Georgia to California, you cannot exchange your primary residence in Georgia for another primary residence in California.

(Check the 1031 exchange California to learn the scope of the exchange in different states)

c. If you own a rental townhouse property in Chicago, you can swap your property for another commercial rental house located in Texas.

2. Equal or Greater Value:

To completely defer from any real property taxes upon selling a property, make sure that the assessed equity and net market value of the newly purchased property is equal or greater than the sold property. If you cannot meet this requirement, you cannot qualify for a 100% tax deferment.

3. Like-Kind Property

The primary requisite to avail the 1031 Exchange is that the property being sold must be the same in form or in nature with the newly- acquired property. This is called as ‘like- kind’ properties. Only the ‘character’ and the ‘nature’ of the property are considered in the 1031 procedure, hence, you are allowed to exchange properties with a different grade or quality.

Here are a few examples:

a. It is allowed to swap a 3-room rental apartment property for a 3-story commercial building.

b. If you own a duplex, you can swap it for an apartment house.

c. You can also exchange your vacation house property for a commercial restaurant space.

4. Must Reflect the Same Tax Owner:

The title of the property and the tax return must contain the same name to qualify for 1031 exchange. However, there’s an exception to this rule in case you are dealing with a sole member limited liability corporation which is allowed to reflect the name of the other members.

Based on the 1031 exchange 2018 records, this rule was given much emphasis by the investors. Hence, you must not disregard the significance of checking the veracity of the papers of the other transacting party.

5. 45 Day Rule:

It is mandated that within 45 days, the property owner must identify up to three like-kind properties potential for exchange. This rule is quite challenging to comply since all the deals must conform to the financial perspective. Most of the investors tend to overprice their property quote especially in times of low interest rates.

6. No ‘Boot’ Allowed:

To enjoy a complete tax-free exchange, you must not receive ‘boot’ in the course of the transaction. ‘Boot’ simply refers to the tax fine for not complying with the requisites of the section 1031 (tax-deferred exchange).

7. 180-Day Purchase Leeway:

After trading a property and the due of the income tax return, it is required that within 180 days, the replacement property must be received by the new owner.
Want to know which of these rules is best to follow? Read here for suggestions. Also, do not forget to check the 1031 exchange rules 2018 reviews for some references.

  • How Long do you Have to buy a Property With a 1031 Exchange?

After the close of the relinquished property, the investor is only given 45 days maximum to suggest prospect replacement properties, and another 135 days to complete the acquisition of the replacement property.

  • How many Properties can be Identified in a 1031 Exchange

A maximum of three properties is allowed in 1031 Exchange as per directed by the 3 Property Rule. The taxpayer may suggest three replacement potentials and is also allowed to procure the three nominated properties.

  • 1031 Exchange Transaction Glitches That You Must Avoid

Like any other transactions, the 1031 Exchange also has some glitches. Whether you are looking at the provisions of 1031 exchange rules 2019, some issues are still inevitable.

Check them out now.

1. Early Fund Returns

There could be a time that a taxpayer suddenly decides to halt the transaction. When this occurs, the taxpayer is obliged to inform the exchange company about the matter and that he or she fully understands the responsibility of paying gain taxes.

You have to remember that exchange facilitators are only mandated to disburse funds at a certain point of the transaction and with a valid reason, and the sudden termination of a deal is not part of that disbursement coverage.

In cases like this, the client doesn’t need to worry since he or she is obliged only to pay applicable and due taxes.

The problem occurs when the facilitator tends to deviate from the exchange rules that may put the previous and succeeding exchange deals in jeopardy.

2. Not Knowing the Person Behind:

Make sure to confirm the identity of the person behind the 1031 exchange transaction.

You must validate the exchange firm if they, indeed, did not receive any designation request for a particular property that is subject for swapping.

If the taxpayer fails to do this, he or she is allowed to receive funds only after the process of identification to be conducted by the exchange company.

3. Payout Pitfall:

It is common for the taxpayer to provide a huge amount of money during the course of the exchange transaction. While there’s no wrong in showing financial stability, be aware also that prior to the purchase of the replaced property, any unsanctioned released of money is under the taxpayer’s responsibility. Under the rules, the taxpayer is not entitled to receive any form of reimbursement at the onset of the transaction.

  • 1031 Exchange Steps

There are certain steps to ensure you are doing 1031 exchange the right way. Read the steps below:

(Before Closing the Renounced Property)

1. Relinquished Property Addendum:

Make sure that you add the Relinquished Property Addendum (RPA) to the sale of the property contract. While this addendum form is not strictly required, this would somehow harness the intent to enter an exchange agreement between two parties.

Providing such details would also imply confidence in providing complete permission for the intermediary to do its tasks to prepare the necessary documents, and also divulge that there’s no outstanding liability for the buyer.

After the exchanger approved the contract on the renounced property, a copy of the contract must be provided to the preferred intermediary. Indicate also the name and phone number of the settlement attorney, including the escrow or company agent who will lead the settlement process.

Then, the Exchange and Escrow Account Agreement of Contract, Notification of Assignment, and instruction to the settlement body will be prepared by the qualified intermediary.
(After Closing the Renounced Real Property)

2. Preparation of Funds:

The settlement attorney then prepares the funds to the qualified escrow as sanctioned by the qualified intermediary. The copy of the exchange fee voucher and settlement statement will be released to all parties.

3. Identification:

After transferring the relinquished property, the exchanger is only given 45 days to nominate a replacement property.

This process has three provisions: the replacement must be received before the end of the 45- day period, it is allowed to nominate more than three prospects provided that they all constitute to a fair value, and to identify more than three replacement properties with a cumulative fair market value that does not go beyond 200% of the relinquished property.

4. Exchange Period:

After identifying the replacement property, you are given a 180- day exchange period to transfer the replacement property to your ownership.

5. Before Transferring the Replacement:

When the contract for the desired replacement is made, another copy of RPA must be provided to affirm that, indeed, the replacement property is of the same kind and is eligible for a like-kind exchange.

6. After Settlement:

Once the intermediary receives the final settlement statement of the replacement property, the intermediary will then pay any earned interest and return the excess escrow fund.

7. Report:

The final step is reporting the complete transfer of property as required by the annual tax return report. You may use Form 8824 (IRS) in your report.

With these benefits, are you ready now to engage in 1031 Exchange?

If you are a doctor, the more that you must master this tax- deferring trick.

So, when do you want to start the exchange?

Let us know by sharing your comments.

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What is the 1031 Exchange and 1031 Exchange Rules 2019

What is the 1031 Exchange and 1031 Exchange Rules 2019

Are you planning to sell a property but the thought of paying capital gain taxes is bothering you? Or do you want to know the latest updates of 1031 Exchange and 1031 Exchange Rules 2019? Stop worrying now; I will teach you all these with 9 bullets.

What you’ll learn:

  1. What is the 1031 Exchange Rule (Background and Principle)
  2. Types of 1031 Exchange (4 Common Types)
  3. What are the 1031 Exchange Rules (7 SECRETS Revealed)
  4. Why is the 1031 Exchange Important?
  5. The Process of the 1031 Exchange
  6. Who Will Hold the Money During the 1031 Exchange Process?
  7. How Many Times are Investors Allowed to do a 1031 Exchange?
  8. Three Property Rules that Must be Remembered
  9. Risks of 1031 Exchange

Let’s start the ball rolling now…

1. What is the 1031 Exchange (Background and Principle)

The 1031 Exchange Rule operates under the provisions of section 1031 of the Internal Revenue Code. This procedure is also known as Starker Exchange or Like-Kind Exchange that is used by financial investors to skip from capital gain taxes.

When you adhere to this rule, investing or swapping of one business to another is completely non-taxable.

There are several reasons why an individual may utilize the 1031 Exchange. Some of them are listed below:

  • You own a real estate investment and consider looking for a managed property to run.
  • You plan to diversify your assets and want to procure a property with a good return prospect.
  • You want to divide property and generate multiple assets or want to combine several properties into a single domain.
  • You may also avail this rule if you wish to reset the depreciation clock.

2. Types of 1031 Exchange (4 Common Types)

Delayed Exchange:

This is the most common type of 1031 Exchange. Under the Delayed Exchange, the investor is given a 180- day leeway [after selling the relinquished property] to determine a new property or a replacement property that the investor intends to buy.

Simultaneous Exchange:

This is considered as the oldest method of employing the 1031 tax-deferred exchange.

3 Ways of Performing Simultaneous Exchange

  • Three- Party Exchange:

There’s a need for an ‘accommodating party’ to carry out this kind of exchange. The ‘accommodating party’ facilitates the transaction of the taxpayer. This procedure has two formats: Baird and Alderson.

Under the Baird Format, the title is directly pass through the Seller, while in the Alderson Format, the title is transferred through the intended Buyer.

  • Two- Party Trade or Swap:

This occurs when two parties swap or exchange deeds with each other. Swapping is deemed better than the other simultaneous exchange procedures since there’s no need for a qualified intermediary. However, it is difficult to find a party that is willing to acquire your property the way you would want to take over the other’s property.

  • Simultaneous Exchange With QI:

If you want a Qualified Intermediary (QI) to do the task of preparing the exchange agreement and other documents, as well as providing written Instructions to the closing officers, this procedure is best for you. When you utilized this procedure, you are assured that you are at the ‘safe harbor’ since the Treasury Regulations of 1991 assured that only the reliable entities are permitted to enjoy the services of a QI.

Reverse Exchange:

This is also called as Title- Holding Exchange wherein it requires the purchased of the Replacement Property and closed the transaction before the Exchange Property is sold.

3. What are the 1031 Exchange Rules (7 SECRETS Revealed)

Rule 1: Same-Nature Property

In the world of investing, it is possible to exchange one property to another as long as they are assets of the same nature. This means that it is possible to exchange a house with a farm lot. It is also allowed to exchange multiple properties into one large property or the other way around. The exchange is valid as long as the new properties are like the original property that you had.

Rule 2: Business Property

The 1031 rule only applies to assets that are for investment or business. This means that you cannot exchange a primary residence you have in one city with another in a different city.

Rule 3: Value

When using the 1031 rule, it is important that the property that will be exchanged with is of the same value or higher. If the replacement property is of less value, 100% of the tax will not be deferred.

Rule 4: The 45-day rule

Within the 45-day period, a replacement property must be identified. It is possible to identify three properties and only buy one. However, if you are going to identify more than three properties, it must not exceed 200% of the total value of the property you are going to relinquish. If the value increases 200%, you will have to buy 95% of the identified properties.

Rule 5: The 180-day rule

The replacement property must be settled within 180 days. The replacement property is the property that will be exchanged with the one you are selling.

Rule 6: Debt Trading

There are times wherein the property that will be traded will have debt. If the properties being exchanged have debt, even if the new property being used to replace the property being relinquished is of higher value, it is important to calculate the debt difference.

If the debt difference is, for example, $200,000, then it is possible to just add this amount to the deal in order to prevent being taxed.

Rule 7: Tax Payer Name

The name that appears on the tax return and the title of the relinquished property should be the same name found in the tax return and the title of the new property.
If you want to know which exchange rule suits for you, further read this article.

4. Why is the 1031 Exchange Important?

The 1031 exchange is important because the price of real estate has already surpassed the “bubble level” which had happened a decade ago. As any good investor would understand, this is the right time to buy and sell properties in the market for cash flow opportunities.

As an investor, there are other numerous reasons why you should be aware of the 1031 Exchange rule. These reasons include searching for a managed property, looking for a property with better profit gains, merging multiple properties into one, saving an asset that has depreciated, or diversifying assets.

5. The Process of the 1031 Exchange

The first step is to identify the properties and see if it will be a good thing to use the 1031 exchange rule.

Calculate your gains in order to decrease the chances of losing money in your deal.

The second step is to look for a qualified intermediary that will be able to help you with the 1031 exchange. The amount that is paid to them is usually around $800 to $1000.

The third step is to put your property on sale.

After that, the fourth step is to look for a replacement property. Keep in mind that an investor has 45 days only to look for and identify a replacement property after his old property has been sold.

The fifth step is to sell the relinquished property.

The sixth step is to identify the replacement property and then the investor is given 180 days to purchase a replacement.

Learn more about the steps of 1031 Exchange Rule 2019 here.

6. Who Will Hold the Money During the 1031 Exchange Process?

During the process, the investor is not allowed to hold the money made from the sale of his property. That money must be kept by the chosen qualified intermediary of the investor until it will be used to purchase the property to be used for replacement.

The qualified intermediary would then ensure that the title and the tax of the old property will be the same as for the new property.

To further understand how an investor can better choose a qualified intermediary, it is advised to look at the treasury regulations.

7. How Many Times are Investors Allowed to do a 1031 Exchange?

There is no limit to how many 1031 exchanges an investor can do. The only requirement is that if an investor is exchanging a property, it must be of the same nature, and the value of the property that will be used for the replacement must be of the same value or of higher value.

There are some cases, however, wherein an individual does a lot of 1031 exchanges. This makes that individual some sort of a dealer.

In cases like these, that individual must prove that he or she is using those properties for investment purposes in order to continue using 1031 exchanges.

Read here to know more about the criteria for performing a 1031 Exchange.

8. Three Property Rules that Must be Remembered

  • Three Property Rule:

This means that you can identify a maximum of three properties that has the potential to be used as replacement property.

It is not necessary to buy all the three properties and you can just choose one of them.

It is also important that the address on the identification paper is complete and must be signed before handing it over to the intermediary that handles the 1031 exchange.

  • Two Hundred Percent Rule:

It is possible to identify more than three properties. However, the total market value of the identified properties must not exceed 200% of the market value of the properties which you have sold.

  • 95% Rule:

If the investor had taken the path of identifying more than three replacement properties, then he or she must settle the deal at 95% of the combined properties during the exchange period within the 180-day rule in order to avoid being charged with tax.

9. Risks of 1031 Exchange

The risk factors of the 1031 exchange can be found in the Private Placement Memorandum. These risks must be understood well by the investor in order to avoid profit loss. This will also help him or her to use the 1031 rule to his advantage.

These are the things that you need to know regarding the 1031 Exchange and 1031 Exchange Rules 2019.

If you find this article helpful, please leave a comment below.

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Tips to Buy a Rental Property in Dallas for Investment (2019 Update)

Investors often want to find ways that they can diversify their investments. One of the best methods of diversification is to start investing in real estate. Buying rental property in Dallas for your investment can be a great choice, but those who are just starting out in this field of investing need to know what they should be looking for prior to investing. The following tips will help to make sure you are making the right choice when you are buying a rental property for sale in Dallas.

The Right Price

One of the most important factors to consider when you buy rental property in Dallas is the price you are going to be paying for the property compared with how much you could make in profit from the purchase. Therefore, you need to make sure you are looking for properties that are priced appropriately for their neighborhood and their size and features. You also need to check the price of current rentals in the area for similar homes to see if it would be profitable for you to make the purchase.

A Great Location

The real estate saying of “location, location, location” is very true. One of the most important tips you will want to keep in mind when you are buying a rental property in Dallas for investment is the quality of the neighborhood. You should always look for properties that are in a good neighborhood that is in demand and that has a low level of vacancies. This is a good sign that there are always people who want to rent in the area, which means you will likely spend less time with an empty rental property.

Consider the Parking Situation

One of the factors that many investors forget when they are buying a piece of property is the parking available for the property. If there is a driveway and plenty of parking on the street, or if there are assigned parking spaces, it is often easier to rent to people. Those properties that do not have parking spaces, or that have inconvenient parking spots are not in demand.

Be Sure You Can Afford the Property

When it comes to the down payment and the monthly mortgage for the investment property, you need to make sure that you can truly afford it, even if you go a month or several months without any tenants in the property. Be sure to go over the numbers carefully to make sure the investment will not get you into financial trouble.

Beware of the “Great Deals”

There are often properties for sale that might seem like great deals when you first look at them. In some cases, you might get lucky and find the ideal Dallas rental property. Other times, though, the great deal you are getting is because there is a problem with the home. It could be in a bad neighborhood, which will make it harder to rent, for example. It could also be a home that needs a lot of care and upgrading before it can be rented. If the deal looks too good to be true, it might be worth passing.

Consider a Property Management Company

If you are living in the Dallas area, you might be able to handle the landlord duties of a single property on your own. However, you might not want to go through the hassle, and you will find that it’s much easier to have a property management company take care of things for you. This is certainly true for those who have multiple properties or who are not located in the Dallas area.

With the preceding tips, you can approach buying a rental property with more confidence. You will know what you should be looking for and what you should be avoiding.

Resources: https://www.consumerismcommentary.com/10-tips-buying-rental-property/
https://www.investopedia.com/articles/investing/090815/buying-your-first-investment-property-top-10-tips.asp?lgl=myfinance-layout-no-ads<>

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The Pros and Cons of Investing in Commercial Real Estate in Dallas (2019 Update)

Property of all types have the potential to be a good investment opportunity. For those who are seeking the most financial reward as possible investing in commercial real estate tends to be the best option. However, it is important to keep in mind that there are also often more risks associated with this type of investment when compared with residential options. If you want to buy a rental property in Dallas for commercial use, you should make sure you understand both the benefits and the risks to this type of investing.

What Is a Commercial Property?

The term commercial property is an umbrella term, under which you will find many different types of buildings in which you can invest. For example, some of the most common types of commercial property includes retail buildings, office buildings, warehouses, and industrial buildings.

However, the term encompasses much more than that. It will also include apartment buildings, as well as mixed use buildings that have office or retail space, along with an apartment or condominium. Medical real estate would fall into this category, too.

One of the important things that you will need to remember when you are investing in commercial real estate in Dallas is that different types of commercial properties will have different management needs. A medical facility, for example, will likely have different needs from an apartment complex or a retail store. To make things easier on yourself, you will want to consider using a property management company that has experience with the type of commercial property you are going to buy.

What Are the Benefits?

First, consider some of the benefits that can come from investing in a commercial property. Naturally, one of the first things that will come to mind is the potential for income. When compared with residential properties, you will find that the annual return from the purchase tends to be around 6% to 12% with the commercial properties compared with about 1% to 4% with residential properties. Of course, a range of factors will affect the profit, such as the location.

Another one of the benefits of investing in commercial property that is not often mentioned is the fact that the tenants tend to do a good job of keeping up the property. They are likely running some kind of business from that property, and they need to keep it in good condition to keep their own customers and clients happy.

The hours of operation for most commercial properties are going to be very similar to the hours that you work. They go home at the end of the day, which means you are not as likely to get a call in the middle of the night because there is a problem at the property. In addition, most investors will hire property management companies to handle problems if they were to occur.

Investors will also find that there is far more objectivity in the price with commercial real estate. When buying residential real estate in Dallas, or any area for that matter, there is always the danger of having a seller who is emotionally attached to the property. They keep their prices high, and it is difficult to talk them down. This is not generally a problem with commercial real estate.

What Are the Risks?

Of course, there are also risks with investing in commercial real estate in Dallas. Unless you are hiring a property management company, you will find that there tends to be more of a time investment when it comes to dealing with the leases and the management of these types of properties. In addition, you will need to have professionals on hand to deal with maintenance issues. Commercial real estate is also a larger initial investment.

Despite the potential risks, most investors agree that there is a lot to be gained from commercial investing. It could be something you want to consider.

Resources: https://www.nolo.com/legal-encyclopedia/pros-cons-investing-commercial-real-estate.html

https://www.colecapital.com/why-commercial-real-estate