Buying Commercial Real Estate – Apartment Tricks and Tips – Money

Exchanging is important because it is a method of marketing property that is not limited just to tax deferral. The all important tax deferral concept of exchanging is still valid especially in cases where depreciation basis may not be a factor. A taxpayer who is exchanging vacant land for a larger tract of vacant land and is interested in preserving equity by deferring the gains, will often desire a 1031 tax deferred exchange. Older taxpayers may seek out the 1031 exchange when the holding period may exceed their lifetime and offer stepped up basis after death. Ultimate tax deferral at death may be a motivation to exchange for certain older taxpayers. A complete discussion of the 1031 tax deferral concept is beyond the scope of this text and the emphasis is on marketing and not on tax deferral. 2 However we will briefly examine the general concept of tax deferral. Assume a sale nets the owner $100,000, creating a tax liability of $20,000. If the owner exchanges his property for a qualifying like-kind property and complies with the rules of Section 1031, the entire tax may be deferred. An outright sale would reduce the equity by $20,000, leaving the investor only $80,000 to invest. Given the opportunity to invest the proceeds in an investment with an after tax return of ten percent on the equity invested, the following after tax cash flows to the investor would be
realized.

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3 Tips for the First Time Commercial Real Estate Buyer

Buying commercial real estate properties may cost more money than buying residential properties. Aside from this, you also need to consider a lot of different things, especially if you are planning to have it rented by other businesses. The problem with a lot of people is that they are not aware of the things should be considered when buying a commercial real estate property. As we go through this article, we will be discussing the tips that will help you determine whether buying a real estate property would be great for you.

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