First time investors who are looking to sell out and then reinvest the money soon learn how much they will pay in taxes in the interim and the start to look for a way to avoid that loss of money. In doing this, it is east to become overwhelmed at all of the real estate lingo, but it is well worth the effort to save your money from Uncle Sam when it is perfectly legal to not pay the taxes
One of the methods of a tax shelter is done through a TIC 1031 exchange. TIC is an acronym for tenants in common. In other words, this is when someone owns a piece of one real whole property with at least one other person.
The smaller individual investor tends to prefer a TIC investment because it allows them to invest in larger property that they may not otherwise be able to invest in. This is a great way for them to get in the game on what they see as a wise investment but that they cannot afford to do all themselves.
When someone decides to get into a TIC property there are a lot of advantages. For example in a 1031 TIC there is the opportunity to have a greater investment and greater equity power because of the tax that is deferred. There is also the ability to break up one large investment property into many small ones and geographically diversify your investment.
However, as with all investments, there are some risks with TIC investments. One risk is that the tax code that allows this to work and shelter money can change and cause some real problems for the investors. Another risk is not being able to get out of the investment quickly. If a need arises that you need the money out of your investment, it is not easy to do in this type of investment because you are dealing with other people that have to sign off on it as well.
The 1031 exchange can be a big help to those who simply want to change where they have their money invested. The taxes can scare people into staying in their current investments when they do not know about the tax shelters.
When doing this type of activity to shelter the money from taxes, it is required by law that you use a 3rd party qualified person or company to handle the money in the interim between selling the first property and reinvesting it into another. This does cost a little bit, but it is not only required but can be very helpful to make sure that you do not make any large mistakes
The 1031 tax exchange is names after the tax code line that refers to this type of tax shelter. It is certainly a great way to defer taxes on property that you are simply reinvesting, but it is not to hide any gains from the sale of property. Use it correctly and you will have no problems. - 31821
One of the methods of a tax shelter is done through a TIC 1031 exchange. TIC is an acronym for tenants in common. In other words, this is when someone owns a piece of one real whole property with at least one other person.
The smaller individual investor tends to prefer a TIC investment because it allows them to invest in larger property that they may not otherwise be able to invest in. This is a great way for them to get in the game on what they see as a wise investment but that they cannot afford to do all themselves.
When someone decides to get into a TIC property there are a lot of advantages. For example in a 1031 TIC there is the opportunity to have a greater investment and greater equity power because of the tax that is deferred. There is also the ability to break up one large investment property into many small ones and geographically diversify your investment.
However, as with all investments, there are some risks with TIC investments. One risk is that the tax code that allows this to work and shelter money can change and cause some real problems for the investors. Another risk is not being able to get out of the investment quickly. If a need arises that you need the money out of your investment, it is not easy to do in this type of investment because you are dealing with other people that have to sign off on it as well.
The 1031 exchange can be a big help to those who simply want to change where they have their money invested. The taxes can scare people into staying in their current investments when they do not know about the tax shelters.
When doing this type of activity to shelter the money from taxes, it is required by law that you use a 3rd party qualified person or company to handle the money in the interim between selling the first property and reinvesting it into another. This does cost a little bit, but it is not only required but can be very helpful to make sure that you do not make any large mistakes
The 1031 tax exchange is names after the tax code line that refers to this type of tax shelter. It is certainly a great way to defer taxes on property that you are simply reinvesting, but it is not to hide any gains from the sale of property. Use it correctly and you will have no problems. - 31821
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A TIC 1031 exchange is a great way for individuals investors to protect their investment money from taxes. However, all types of a 1031 exchange are good for investors.
