1031 Blog

Passive real estate ownership

Investment pool a hands-off option

Russ Wiles
The Arizona Republic

Many investors will go a long way to skirt taxes, especially in real estate.

The latest proof of this? New investment pools have emerged that utilize tax-free property exchanges with a securities twist.

These complex and upscale deals, known as "tenants-in-common" investment pools, combine the tax, income and other benefits of real estate with passive ownership. Of note, they can be used by small-scale real estate owners who want to sell their properties while avoiding the capital-gains and depreciation taxes that would normally apply.

Tenancy in common is a way to hold real estate in which each investor receives an undivided, fractional interest in a property, whether it's an office tower, warehouse or whatever. Each owner receives title, the ability to depreciate his or her share of the property for tax purposes

'Exchange' lets investors defer tax on capital gains

By Gail Liberman
Sunday, June 19, 2005

Looking for a way to sell an investment property yet defer capital gains? The key could be a "1031 exchange."

Under Section 1031 of the Internal Revenue Code, investment property owners can defer payment of capital gains taxes by "exchanging" the property for another investment property of equal or greater value.

Conditions: The investor generally must identify the replacement property within 45 days of the sale of the old property and acquire the new property within 180 days. Partnerships are ineligible.

Now, new types of private placement deals are making 1031 exchanges easier. Known as Tenant-in-Common 1031 Exchanges, these deals, estimated already to have attracted some $4 billion, sprang from a landmark March 2002 IRS ruling.

Real Estate: Buy Low, Sell High... Pay taxes

By Linda Stern
Newsweek June 20 issue

Making money in this red-hot real-estate market has been easy. What's taxing is figuring out how much you owe Uncle Sam when you sell your house. Many home sellers this spring are racking up big gains, but they aren't sure what to do with them. Here's what you need to know: GIVE YOURSELF A BREAK. If you've lived in your home for two of the five years leading up to your sale, you can exclude from taxes up to $250,000 of gain on the home. Double that to $500,000 if you're. . . full story here.