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These Common Approaches Can Protect Your Future
The 1031 Exchange.
Under section 1031 of the Internal Revenue Code, a real property owner can sell his property and then reinvest the proceeds in ownership of like-kind property and defer the capital gains taxes. To qualify as a like-kind exchange, property exchanges must be done in accordance with the rules set forth in the tax code and in the treasury regulations. The 1031 exchange can offer significant tax advantages to real estate buyers. Many investors hold the property as Tenants in Common (TIC).
Tenants in Common.
A TIC is a form of real estate asset ownership in which two or more persons have an undivided, fractional interest in the asset, where ownership shares are not required to be equal, and where ownership interests can be inherited. Each co-owner receives an individual deed at closing for his or her undivided percentage interest in the entire property. Through TIC ownership, the average person is able to enjoy ownership in an institutional-type property with a minimum investment.
Self-Directed IRA or Keogh.
IRA's have custodians or trustees, as do Keogh's and other qualified plans. Vesting must always be in the name of the custodian or trustee. IRA's never have individuals as custodians or trustees, unless an individual is properly certified under IRC 401 12(n) as a person who qualifies as a non-bank trustee. Using these retirement vehicles to finance a property can help with asset protection as well as reducing taxes.
Buying a Business Entity (Corporation, LLC, LLP).
Business owners in Texas need to be aware of our franchise tax. The Texas franchise tax is a privilege tax imposed on each corporation and limited liability company hartered/organized in Texas or doing business in Texas. For franchise tax purposes, the term "corporation" also includes a bank, state limited banking association, savings and loan association, Limited Liability Company, professional limited liability company, a corporation that elects to be an S corporation for federal income tax purposes, and a professional corporation. We have Certified Public Accountants and real estate attorneys who are familiar with our taxation and business policies. Referrals can be provided upon request.
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