Wave Goodbye To Uncle Sams Taxes

Wave Goodbye to​ Uncle Sam’s Taxes
There exists an​ incredibly powerful wealth-building strategy that has been around since 1921,​ and is​ still used by the​ country's most savvy real estate investors .​
Remarkably,​ the​ IRS made this tax deferral possible.
Put simply,​ you​ can defer (possibly forever,​ if​ you​ meet a​ certain condition which I’ll share in​ a​ moment) capital gains taxes on​ the​ profits from the​ sale of​ a​ foreign property if​ you​ use the​ proceeds of​ the​ sale to​ buy another foreign property.
I’ve helped people perform these types of​ exchanges (Section 1031 or​ like kind exchanges) for the​ past six years .​
I​ can help you,​ too,​ but first,​ a​ couple of​ caveats:
1 .​
You can’t exchange U.S .​
real estate into foreign real estate .​
This is​ a​ source of​ some confusion,​ probably dating back to​ a​ time before like kind property was clearly defined and codified by the​ IRS .​
Although there have been cases where a​ 1031 exchange of​ U.S .​
real estate for foreign property has been performed when the​ replacement property was in​ Puerto Rico or​ the​ U.S .​
Virgin Islands,​ the​ cold hard fact is​ that today you​ cannot 1031 exchange U.S .​
property for foreign real estate in​ most parts of​ the​ world.
2 .​
Unless you​ perform a​ 1031 exchange,​ Uncle Sam will be sitting silently at​ the​ closing table with you​ waiting for his 15% share of​ the​ profits,​ whether the​ real estate being sold is​ in​ Paris,​ San Miguel de Allende,​ or​ Buenos Aires.
Please note that you​ must 1031 exchange the​ entire proceeds of​ the​ sale (less selling expenses),​ not just the​ profit or​ there will be cash boot,​ and taxes due .​
Further,​ if​ you​ have a​ mortgage on​ the​ property being exchanged you​ are required to​ have a​ mortgage (for an​ equal or​ greater amount) on​ the​ new property to​ avoid mortgage boot.
The Good News
If you​ 1031 exchange foreign property it​ doesn’t have to​ be in​ the​ same country to​ meet the​ like kind requirement .​
For example,​ you​ could 1031 exchange the​ proceeds of​ a​ sale from a​ Paris condo into beachfront property on​ Roatan.
Plus,​ you​ can 1031 exchange a​ single foreign property for multiple foreign properties…or 1031 exchange multiple foreign properties for a​ single foreign property--so long as​ the​ exchange is​ balanced,​ i.e .​
the value of​ all relinquished property is​ equal to​ or​ greater than the​ value of​ all replacement property.
So,​ you​ could,​ after 10 years of​ shrewd buying,​ sell your Paris condo,​ Roatan beach home,​ and Cancun beachfront lot,​ all worth a​ total of​ $1.5 million…and exchange the​ proceeds for a​ lovely $1.5 million Tuscany villa complete with vineyard (or visa versa)…and defer the​ capital gains tax you​ would otherwise owe Uncle Sam.
Remember when I​ said there was one condition that would allow you​ to​ defer the​ capital gains tax forever? Well,​ it’s good news for your heirs--that condition is​ when you​ die .​
At that point,​ your heirs will inherit your property on​ a​ stepped up basis meaning at​ fair market value at​ the​ time of​ you​ death .​
Ergo,​ no capital gains taxes will be paid by them (although they may owe estate tax).
Used properly,​ 1031 exchanging can eliminate equity shrinkage when you​ sell a​ property,​ therefore giving you​ more money to​ buy your next property .​
This can be repeated again and again,​ until your heirs inherit the​ property and pay no taxes for your 1031 exchange activities.
Wave Goodbye To Uncle Sams Taxes Wave Goodbye To Uncle Sams Taxes Reviewed by Henda Yesti on July 06, 2018 Rating: 5

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