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03.05 Open Letter to Congressman Bart Stupak Health & Environment
Video National Health Care Systems In Other Countries 03.18 Pressure Drop: Brave Sir Dennis Ran Away 03.12 Slick Barry and the $100-Billion Medicaid/Medicare Fraud Claim 03.09 Kill Bill: Death to Obamacare! 03.09 Obama’s Rhetoric May Be “Fiery,” But His Health Care Reform Is Still Lukewarm Media Watching
03.17 CNN Scrapes Bottom of Right-Wing Barrel With Erickson Hire 03.16 WPost Blames Obama First, on Israel 03.16 Letter to the New York Times' Editor: Stovepiping To Persia 03.12 Cud and Complicity: Burying the Alternatives to Empire's Dominion 03.11 NYT and the ACORN Hoax 03.05 Sorry, Rove, Bush Did Lie About Iraq 03.03 It's Snow News 03.03 The Woeful Washington Post Ref. : The Daily Howler Legal Matters
02.26 America's Supremes: Court Over Constitution US Politics, Policy & Culture
03.11 Power Rangers: Policing the System With the "Fightin' Progressives" 03.09 Thinking About Countings 03.07 Unnatural Acts: Breaking the Fever of Militarism 02.25 Future Shock: A Better World Beyond the Imperium High Crimes?
03.19 Israel's Troubling Tilt Toward Apartheid 03.18 The Lawfare Project's Anti-Democratic Agenda 03.16 America's Secret Prisons 03.13 Palestinian Dispossession in East Jerusalem 03.12 Israeli Settlement Expansions Continue 03.11 Brutalizing Palestinian Children 03.08 The Russell Tribunal on Palestine: Barcelona Session 03.05 Targeting Israeli Apartheid 03.01 America's Permanent War Agenda 02.25 Global Sweatshop Wage Slavery Economics & Business Non/Mis/Malfeasance
03.19 The Growing Movement For Publicly-Owned Banks 03.19 America's "Houdini Recovery" under IMF-Type Austerity 03.14 The Crisis in America's Telecommunications Network 03.09 The Business of Water: Privatizing An Essential Resource 03.05 Is the Recovery Real? 03.04 IMF-Style Austerity Measures come to America: What “Fiscal Responsibility” Means To You 03.04 Barry C. Lynn's "Cornered: The New Monopoly Capitalism and Economics of Destruction" 03.01 Thinking About Fees International
03.15 Peace Process Hypocrisy: Stillborn from Inception 03.03 Muslim Disunity 03.02 Funding Israeli Militarism, Belligerence and Occupation 02.26 Iran Captures a 'Good' Terrorist We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.
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CONSUMER INFORMATION:Why '1031 Exchanges' Interest InvestorsSince 2002 IRS clarifications, 1031 exchanges can now be used by tenants-in-common (TIC)
With the recent run-up in real estate prices, investors are looking for ways to defer capital gains taxes. Unlike a primary residence, where a $250,000 exclusion amount may apply if certain criteria are met, the individual investor is left with few alternatives to avoid taxation. However, Section 1031 of the IRS Code may provide just what the individual investor is looking for.Because of 2002 IRS clarifications, the 1031 exchange has become a very popular option for many real estate investors. A 1031 exchange (named after Section 1031 of the IRS code) is not a new idea. It was created in 1921 in order to allow for a reciprocal transfer of certain types of property. In the past, abiding by the very strict requirements of the 1031 caused investors to choose other options when selling their real estate. Now, with Tenants-in-Common (TIC) ownership, the popularity of the 1031 has been increasing significantly. Since 2001, the amount of money invested in TICs has roughly doubled each year. It is believed that TICs will reach more than $5 billion in 2006. A 1031 exchange is usually a three-way delayed exchange in which an intermediary is used to facilitate the transaction. There are four basic steps:
The power behind the TIC Heirs receive a stepped-up basis on the TIC investment, potentially eliminating capital gains taxes altogether.
One driving force behind the increase in TICs is the ability to defer taxes on the gains from the sale of certain types of property, while taking advantage of the recent real estate boom in highly desirable areas. Another driving force is TIC investors typically become owners of high quality commercial or industrial property. Thus, the owner becomes a passive owner, which means no 2:00 am phone calls that the toilet is clogged or the heater broke. A third benefit is TIC investors can receive monthly income from their investment while still having the potential for appreciation of the property. Lastly, heirs receive a stepped-up basis on the TIC investment, potentially eliminating capital gains taxes altogether.There are risks involved While a TIC investment provides many benefits, you should also be aware of the risks and limitations of such an investment. TIC interests are not freely transferable, and there is no secondary market for these interests. Cash distributions and potential property appreciation are not guaranteed. Also, investors in a TIC are subject to the typical risks of real estate ownership such as economic influences, occupancy rates, and tenant risk. Some Dos and Don’ts
Benjamin Hoffman is Vice President of Investments for H&R Block Financial Advisors located in the firm’s Timonium, Maryland office. He may be reached at 410-308-6108 and bhoffman@hrblock.com.
Copyright © 2006 The Baltimore Chronicle.
All rights reserved. Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent. This story was published on June 21, 2006. |
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