Using the Tax Code to Your Advantage

• Multifamily properties continue to be the most heavily traded asset class, maintaining strong liquidity, albeit somewhat impaired. With rising borrowing costs, investors are now eagerly seeking assets with more favorable financing rates.

• Rents have faced pressure, particularly effective rents. Nevertheless, markets that have lagged in recent years are now leading in rent gains, particularly in the Northeast and Midwest. Nationally, asking rents are back on the rise, indicating a positive trend across the board.

1031 Exchange Advantage

Let's get some scenarios to truly understand what happens when you do not 1031 exchange your property.

Let's say you have some family in another city that you want to visit a little more. There is a Duplex that you have been following. You decide it is time to take that opportunity to purchase and fix the property. A few years later you sell it and feel as if you're on top of the world. Only there is one issue. Your accountant gives you a call and says get ready to write that check to the IRS for $60,000.

This is a scenario of course...

The craziest part: Take that $60,000 and amortize that at compounding interest at 10%. For 30 years that comes out to $1,046,964.14.

Shocking right?

Let's explore some more tax benefits...

Two loophole tax benefits the IRS gives you in Real Estate

1 is the Primary Residency and 2 is the Tax Cuts and Jobs Act

1. Primary Residency

When taxpayers file for taxes on capital gains from a sale of any property they qualify for a federal tax exclusion of $250,000 gain ($500,000 if married and filing jointly). If they meet the following IRS requirements…

• They owned the home and used it as a primary residence for at least two of the five years preceding the sale of the property.

• They did not acquire the home through a like-kind exchange in the past five years.

• They did not exclude the gain from the sale of another home for up to two years before the sale of this home. link

2. Tax Cuts and Jobs Act

• It allows property owners to deduct a significant portion of the asset's cost in the year it is placed in service, rather than depreciating it over several years.

• This immediate deduction can help offset taxable income substantially, reducing overall tax liabilities for investors.

• By encouraging real estate investment through accelerated depreciation, the government aims to spur economic growth, promote job creation, and bolster the housing market. link

What does this do for the economy? ✅

Essential for a healthy economy.

• When you're investing in real estate those are big assets that take dollars off the street. They are inflation fighters. The government prints it we buy real estate and tuck it away.

• For every 1031 exchange that happens two realtors that got a commission, attorneys, painters, and much more.

• When money is circulating that is when the economy is at its best.

Who can help me understand this a little better?

Dave Foster has utilized 1031 Exchanges as a fundamental strategy in his real estate investments for nearly 25 years. His team can demonstrate how this real estate investing solution can elevate your investment strategy. By leveraging 1031 exchange provisions to defer taxes and optimize capital, investors can expand their portfolios while maximizing personal tax benefits. If you want to learn more visit their site.

For Rocket Cos. founder Dan Gilbert, a $6 billion bet on Detroit’s comeback is starting to pay off. Amazon has also joined the space with recent news regarding the unemployment rate in Detroit, which has been gradually decreasing since 2015. According to The Bureau of Labor Statistics, Detroit recorded a 5.6 percent unemployment rate, just a few points higher than the national average of 5.1 percent.

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