Real Estate

1031 Exchanges. Your Path to Trading Real Estate TAX FREE!

Because of its favorable tax treatment, investing in real estate can be extremely advantageous.

If you are considering selling an investment property and intend to purchase another “like-kind” property with the proceeds, a 1031 exchange should be considered. A 1031 exchange is a legal provision that allows a seller to sell one property, purchase another property, and defer capital gains taxes. (Section 1031 exchange does not apply to exchanges of inventory, stocks, bonds, notes, other securities or evidence of indebtedness, ETC.) This is strictly for real estate. How does it work?

  • Both properties involved must be investment properties and of “like-kind”;
  • You cannot experience any gain from the sale;
  • The purchase price on the new property must be equal to or more than the net proceeds from the sale of the old property;
  • You cannot act as your own facilitator. In addition, your agent (including your real estate agent or broker, investment banker or broker, accountant, attorney, employee or anyone who has worked for you in those capacities within the previous two years) can not act as your facilitator. Everything must pass through a qualified intermediary (QI);
  • The tax on the gain is deferred, not forgiven. When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.

For more information on Like-Kind Exchanges Under IRC Code Section 1031, please visit irs.gov or consult with your attorney.

 

Real Estate, Uncategorized

It’s Time to Tell Your Landlord, “Hey, Hey, Hey Goodbye…Nah, Nah, Nah, Nah”….

Is buying a home a wiser choice than renting? I get this question ALL THE TIME, especially from twenty-somethings. At this moment in time, buying is the smartest decision.  Please consider the following before your throw one more cent away on that home that you will NEVER own:

While comparing monthly mortgage payments to rent is a good starting point, you need to consider this, part of your mortgage payment is being applied to principal. This is forced savings! For example”e, if you purchase a $200k home with a 30 year mortgage at 4.25%, your monthly payment will be $993 with $285 of that amount going to the principal.

Low mortgage rates have kept homeownership from becoming more expensive than renting. If you are considering purchasing now, be mindful that real estate forecasters are predicting a significant increase in 2015.

As a renter, you have ZERO control over your housing destiny. The landlord is in total control. If S/he decides to sell or are foreclosed on , you will be out of a home. They can also raise your rent at the end of your lease or choose not to rent to you at all. Owning a home will give you a sense of security that you cannot find in renting.

You also have the option of doing whatever it is you want to do with your own home. Paint the walls garnet or orange? Go right ahead! It’s yours! Perhaps you want to add a deck or hardwoods? More often than not, these types of improvements add to the value of your home.

Owning a home will reduce your federal and state tax obligations because of the deductibility of interest payments on your mortgage. When you rent, you end up with 12 cancelled rent checks at the end of the year. However, as a homeowner, you end up with 12 cancelled mortgage checks that are nearly fully tax deductible in most cases.

Yes, owning a home comes with repair expenses down the road, but anyone who thinks that you do not need to worry about a leaking roof or shotty heating & air in a rental home has not met my new buyer client’s former landlord.

In short, the answer to the question of whether you should buy or rent is so obvious that it is hardly worth stating. Property prices and interest rates are going up. Owning a house is a wise move.

If you are considering investing in your future and telling the landlord, “goodbye”, call me today! (803).944.9544. Serving Lexington, Richland, & Newberry Counties.

Uncategorized

This is REAL ESTATE. A handshake IS NOT enough!

Over the weekend, I had an offer come in on one of my listings. My client subsequently countered the offer. The Buyer’s agent advised verbally that the counter was accepted by his client and that he would get the ratified contract over to me right away. That was on Saturday. Sunday morning rolled around and still no contract in my email. I called the agent and did not receive an answer. By lunchtime, the home was being viewed again by another agent and their buyer. I text the agent (who gave me verbal acceptance of the counter) to ask if he had emailed the signed contract and to advise that the home was currently being shown by another real estate agent. His response was, “I will get it to you tomorrow. The Sellers are in agreement, correct”?

My client was indeed in agreement. That being said, had the real estate agent showing the home on Sunday afternoon presented an offer on the home, my duty would have been to submit that offer to my client and if my client chose to accept that offer, they were free to do so. Why?

In South Carolina, contracts for the sale of real property must be in writing to be enforceable. Oral promises are not legally enforceable when it comes to the sale of real estate! There is a serious lack of inventory right now. Do not lose your dream home because the contract wasn’t signed. Know that until all parties have signed off on the agreed upon terms, you do not have an enforceable contract. In real estate, a handshake is NOT enough! See § 32-3-10