Archive for the '1031 Exchanges' Category
Charitable Remainder Trust & Honolulu Real Estate
February 6th, 2009 categories: 1031 Exchanges, Honolulu Real Estate 101, Reasons To Sell
When a rental property has been owned for an extended period, especially in Honolulu, it has probably appreciated an incredible amount. For many, this property may represent a major portion of their investment portfolio. The sale of this type of property could be a significant tax event! If a property were purchased 40 years ago, the owner may have paid a $100,000 for it and it could be worth $1,200,00 today. It is safe to assume that the entire $1,200,000 could be exposed to a combined Federal and State capital gains tax of 22.25%. This means an outright sale without prior planning could require a seller to pay a tax of $267,000! What options are available to a seller? Read the rest of this entry »
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1031 Rule Could Shorten Your 180 Days!
October 20th, 2008 categories: 1031 Exchanges, Honolulu Real Estate 101
Julie Tumbaga, Vice President in Honolulu of OREXCO 1031 Exchange Company (808-524-6737), sent me an email clarifying a rule that could have a significant impact on your IRC Section 1031 Tax Deferred Exchange that closes toward the end of 2008. Julie said…
“This is a reminder that under the Treasury Regulations governing Section 1031 exchanges, the exchange period commences on the date the taxpayer transfers the relinquished property to the buyer and ends at midnight on the earlier of the 180th day thereafter or the due date (including extensions) for the taxpayer’s return. Treas.Reg. Section 1.1031(k)-1(b)(2)(ii).
Consequently, if you transfer relinquished property on or after October 18, 2008 through December 31, 2008, you will have less than the full 180 days to complete the exchange unless you file for an extension on your tax return which is due on April 15, 2009.”
If you would like to discuss a 1031 Exchange, please call me at 808-737-2093 (toll free 877-737-2093)
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Honolulu Industrial Investments
October 16th, 2008 categories: 1031 Exchanges, Buying Honolulu Real Estate
The agent that represents the company that owns the building in which RE/MAX 808 Realty resides, recently told me that he did not expect office vacancy rates to rise. His thesis was that during the recent real estate boom, there were no significant additions to Honolulu commercial office inventory. Last week’s Pacific Business News reported that supplies of Honolulu industrial space are very low too. Surprise, surprise, surprise it seems there were no significant additions to inventory either.
“Oahu’s vacancy rate last quarter was about 4 percent, only slightly higher than the same quarter a year ago when it was 3.8 percent, according to the industrial market report by Colliers Monroe Friedlander.”
CLICK HERE TO READ THE PBN ARTICLE
Looking down the Ala Wai from Iolani School
So why report this? If you are an investor thinking about purchasing or doing an exchange into a better performing market and/or property, then Honolulu might just be the place for you. If you would like to discuss opportunities, please feel free to call me at 808-737-2093 (toll free-877-737-2093).
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Refinancing Your Honolulu Property Before or After an Exchange!
September 3rd, 2008 categories: 1031 Exchanges
I recently received an email from Cindy Naito and Anthony Alosi, of First American Exchange, and it discusses possible advantages of refinancing a property before or after you complete a 1031 Tax Deferred Exchange. It reads as follows.
“Seasoned 1031 exchangers know that if they receive cash in an exchange, rather than investing it in the replacement property, the transaction will be partially taxable. It’s not surprising, therefore, that many real estate investors desire to refinance the relinquished property immediately before an exchange, or the replacement property immediately after an exchange, in order to get cash out of the property without being taxed. Read the rest of this entry »
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Honolulu 2nd Home Seller?
April 23rd, 2008 categories: 1031 Exchanges, Reasons To Sell
I received an email update from Cindy Naito, of First American Exchange Company, regarding the tax treatment of a second or vacation home. Goods news. Until now it was generally understood that a seller could not use an IRC Section 1031 Exchange to defer the capital gains tax on the sale. Based on this update, it appears you may be able to qualify for 1031 treatment! Given the number of second and vacation home owners in Honolulu, this is a terrific idea. NOTE, IF YOU HAVE A VACATION HOME AND ARE THINKING ABOUT USING A 1031 TAX DEFERRED EXCHANGE AS A PART OF A SALE, GET ADVICE FROM YOUR OWN TAX EXPERT TO DETERMINE IF YOU QUALIFY.
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Revenue Procedure 2008-16 - Safe Harbor for Exchanges of Vacation Homes and Conversions to or from Personal Residences
This revenue procedure, which will be effective for exchanges occurring on or after March 10, 2008, establishes a safe harbor regarding when a vacation home can be considered investment property and traded in a §1031 exchange. The ruling states that a vacation home qualifies for a §1031 exchange if the investor owns the home for at least 24 months, rents it for at least 14 days for each 12-month period, and uses it no more than the greater of 14 days per year or 10 percent of the number of days during the year that the home is rented. These requirements apply to both the relinquished and replacement properties.
For purposes of this revenue procedure, a vacation home, also called a “dwelling unit” in the Revenue Procedure, is real property improved with a house, apartment, condominium, or similar improvement that provides basic living accommodations including sleeping space, bathroom and cooking facilities.
Source-Cindy Naito, First American Exchange Company
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Reasons To Sell Your Honolulu Real Estate-1031 Exchange
April 16th, 2008 categories: 1031 Exchanges, Reasons To Sell
Before you consider an IRC Section 1031 Tax Deferred Exchange you will want to seek counsel from your financial advisor, CPA, accountant, attorney and qualified experts in 1031 Exchanges.
After all of my chatter about the value of owning Honolulu real estate, I’ll bet you’re wondering, “Why should anyone ever sell something they own in Honolulu?” And my answer is, the only reason to sell is if you have something better to do with the money or if you can do something with it that is more meaningful to you. I will spend the next few months writing blogs about “Reasons To Sell Your Honolulu Real Estate”. This blog is the first of what will be many installments in this series.
Let’s assume that you live in the outside Hawaii and have owned a property here for the past 20 to 30 years. You were stationed here with the military, your career brought you or you are someone who grew up here. In any case, you don’t see yourself moving back to Honolulu and you have all of this equity built up in your piece of the rock. Homes in Honolulu can easily be $1,000,000 and condos can cost $500,000. If you sell, you are looking at a combined State of Hawaii and federal capital gains rate as high as 22.25% of you long term gain. Read the rest of this entry »
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