Know Your Strategy When Adding Real Estate To Your Portfolio
Are you thinking of adding real estate to your portfolio? If you are, please consider the acquisition of a property that could be a principal residence at a later time for you and your spouse. If you have always wanted to live at the beach or in the mountains, this strategy allows you to get a second home or rental into your portfolio while keeping the option open for making it a principal residence at a later date. Why is this important? Please read on to find the answer.
If we create a real estate piece to our portfolio that allow us to claim property as our principal residence at some point, there is the potential to save on income taxes. Suppose that one purchases a property as a rental with the idea that it would make an ideal principal residence at some later date. Assuming that they currently own a principal residence. they will be able to sell their current home and get the $250,000 or $500,000 gain exclusion (under IRC code 121) providing they meet the requirements. Later, they can move into their one-time rental or second home and claim this as a principal residence (having it qualify as a principal residence will require living in it for 2 out of 5 years). This would allow for the property owner to enjoy increases in market values while enjoying favorable income tax attributes as well. This is called having the best of all possible worlds.
In short, planning ahead will always save you money, especially if you are aware of the rules. ONe can even do a section 1031 exchange into a investment or business use property with the idea that it will become a principal residence at some later date. The 1031 exchange is like-kind property allowing the deferral of gain when acquiring a substantially similar property to the one being sold. Imagine the tax savings when this gain deferral becomes permanent when the property becomes a principal residence at a later point in time. I wish you happy planning and invite you to ask questions or listen to my radio program, "Better Business", Saturday mornings at 10ET on WBIS AM 1190
If we create a real estate piece to our portfolio that allow us to claim property as our principal residence at some point, there is the potential to save on income taxes. Suppose that one purchases a property as a rental with the idea that it would make an ideal principal residence at some later date. Assuming that they currently own a principal residence. they will be able to sell their current home and get the $250,000 or $500,000 gain exclusion (under IRC code 121) providing they meet the requirements. Later, they can move into their one-time rental or second home and claim this as a principal residence (having it qualify as a principal residence will require living in it for 2 out of 5 years). This would allow for the property owner to enjoy increases in market values while enjoying favorable income tax attributes as well. This is called having the best of all possible worlds.
In short, planning ahead will always save you money, especially if you are aware of the rules. ONe can even do a section 1031 exchange into a investment or business use property with the idea that it will become a principal residence at some later date. The 1031 exchange is like-kind property allowing the deferral of gain when acquiring a substantially similar property to the one being sold. Imagine the tax savings when this gain deferral becomes permanent when the property becomes a principal residence at a later point in time. I wish you happy planning and invite you to ask questions or listen to my radio program, "Better Business", Saturday mornings at 10ET on WBIS AM 1190
Are you thinking of adding real estate to your portfolio? If you are, please consider the acquisition of a property that could be a principal residence at a later time for you and your spouse. If you have always wanted to live at the beach or in the mountains, this strategy allows you to get a second home or rental into your portfolio while keeping the option open for making it a principal residence at a later date. Why is this important? Please read on to find the answer.
If we create a real estate piece to our portfolio that allow us to claim property as our principal residence at some point, there is the potential to save on income taxes. Suppose that one purchases a property as a rental with the idea that it would make an ideal principal residence at some later date. Assuming that they currently own a principal residence. they will be able to sell their current home and get the $250,000 or $500,000 gain exclusion (under IRC code 121) providing they meet the requirements. Later, they can move into their one-time rental or second home and claim this as a principal residence (having it qualify as a principal residence will require living in it for 2 out of 5 years). This would allow for the property owner to enjoy increases in market values while enjoying favorable income tax attributes as well. This is called having the best of all possible worlds.
In short, planning ahead will always save you money, especially if you are aware of the rules. ONe can even do a section 1031 exchange into a investment or business use property with the idea that it will become a principal residence at some later date. The 1031 exchange is like-kind property allowing the deferral of gain when acquiring a substantially similar property to the one being sold. Imagine the tax savings when this gain deferral becomes permanent when the property becomes a principal residence at a later point in time. I wish you happy planning and invite you to ask questions or listen to my radio program, "Better Business", Saturday mornings at 10ET on WBIS AM 1190
If we create a real estate piece to our portfolio that allow us to claim property as our principal residence at some point, there is the potential to save on income taxes. Suppose that one purchases a property as a rental with the idea that it would make an ideal principal residence at some later date. Assuming that they currently own a principal residence. they will be able to sell their current home and get the $250,000 or $500,000 gain exclusion (under IRC code 121) providing they meet the requirements. Later, they can move into their one-time rental or second home and claim this as a principal residence (having it qualify as a principal residence will require living in it for 2 out of 5 years). This would allow for the property owner to enjoy increases in market values while enjoying favorable income tax attributes as well. This is called having the best of all possible worlds.
In short, planning ahead will always save you money, especially if you are aware of the rules. ONe can even do a section 1031 exchange into a investment or business use property with the idea that it will become a principal residence at some later date. The 1031 exchange is like-kind property allowing the deferral of gain when acquiring a substantially similar property to the one being sold. Imagine the tax savings when this gain deferral becomes permanent when the property becomes a principal residence at a later point in time. I wish you happy planning and invite you to ask questions or listen to my radio program, "Better Business", Saturday mornings at 10ET on WBIS AM 1190
posted by zzzzzzzzzzz at
3:53 AM
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