Tag: Investing

Greatest Home Seller in History?

Recently, I was having coffee with a number of my Real Estate peers and the subject of the Saint Joseph Statue was brought up.  I had known about the Statue for some time and have even used it on hard to sell properties.  My parents’ agent used the statue years ago to sell their house.

For those of you unfamiliar with Saint Joseph, he was Jesus of Nazareth’s earthly father.  He was a skilled carpenter and taught his skills to Jesus.  He made sure his family always had a home over their head.  For centuries, people have prayed to St. Joseph when they needed help in finding or selling a home.

Legend has it a group of Nuns in the early 1500’s needed land for their cloister.  They prayed to St. Joseph and then buried St. Joseph medals and continued to pray to him.  Shortly, after their prayers were answered and they received the much needed land.  Their medals were the first “St. Joseph Real Estate Sales Kit”.  Later the medals were replaced with small statues.

St. Joseph Real Estate Sales Kit

Whether you are a believer or not, the Legend is well known in Real Estate circles.  The “Real Estate Sales Kits” are available at many Real Estate Board stores.  Thousands of testimonials are available on online websites that sell the “St. Joseph Sales Kits”.  The statue is buried head down in front of the property.  A daily prayer is recited asking St. Joseph to help.  When the house sells, the owner is to dig up the statue and take it to their new home.  The statue is then buried head up and the blessings follow the family to their new home.

So, if you have a hard to sell property, you may want to look into this historic sales kit.  Will it help?  I can’t say but a little prayer never hurts!

 

Mike Cathell,
Broker/Owner, Investment Property Consultant

Real Estate Services of SWFL, LLC
Real Estate Services of Citrus County, LLC

Cell:  (239) 770-6250   Fax:  (239) 288-2505
Email:  InvestSWFL@gmail.com
 
#Florida Real Estate     #Cape Coral Real Estate    #Fort Myers Real Estate
#Real Estate Investing   #Property Investments   #Wholesale Properties
#Wholesale Florida Properties  #Commercial Real Estate Funding

Lecanto, FL Investment Property

This property is located in Central Florida, northwest of Ocala.  There are 5 mobile homes on the property, 4 2-bedroom and 1 3-bedroom.  The property is 100% rented with rents between $575 to $690 per month.

Approximately, $15,000 was spent on repairs and rehab, including branch removal, trash/furniture removal, abandoned car removal and grounds maintenance.  Rehab has included appliance replacement, leak repair, pest control of buildings and land, painting and some roof repair.  A specific list is available for viewing.

Possible Owner financing available.

Email InvestSWFL@gmail.com for information.

 

Lecanto, Florida info

 

Mike Cathell,
Broker/Owner, Investment Property Consultant

Real Estate Services of SWFL, LLC
Real Estate Services of Citrus County, LLC

Cell:  (239) 770-6250   Fax:  (239) 288-2505
Email:  InvestSWFL@gmail.com
 
#Florida Real Estate     #Cape Coral Real Estate    #Fort Myers Real Estate
#Real Estate Investing   #Property Investments   #Wholesale Properties
#Wholesale Florida Properties  #Commercial Real Estate Funding

Motivational Monday Oct. 6, 2014

Optimism is the faith that leads to achievement.  Nothing can be done without hope and confidence.

– Helen Keller

 

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Is It Really Worth It to Do a 1031 Exchange? Yes!

A common statement we hear from a number of people is “I am not even going to bother doing an exchange.  I’m just going to cash out, pay my 15% and move on.”  What these individuals do not realize is that they could be subject to not only capital gains tax but state tax and depreciation recapture.  It’s no secret that capital gains tax will most likely increase from the current 15% to between 20-30%.  This could pose a big financial burden on taxpayers who sell investment property that has a substantial gain.  Add to that the potential for 25% depreciation recapture and applicable state taxes, and the end result is that the taxpayer ends up paying more in taxes than they anticipated.

During the economic downturn, the number of taxpayers utilizing a 1031 exchange was few and far between.  Investors with fairlyWrite measurable goals new properties had little or no gain to defer.  In fact, a number of properties decreased in value.  These days, it appears that things are starting to come full circle.  More and more investors are utilizing the exchange again to save valuable tax dollars.  Taxpayers with older properties that have significant appreciation are taking advantage of the current prices of real estate.  For example, they are exchanging from vacant land to rental properties, or vice versa.

1031 is a section of the tax code which states that if you sell a piece of business use or investment real estate and purchase another piece of business use or investment real estate, you can defer not only all of capital gains, but also any applicable state and depreciation recapture taxes.  This tax code is geared specifically for the investor.  This means that one cannot exchange a primary or second home.  The property must be held for investment or business use.  The IRS has set forth specific rules to ensuring that the taxpayer has a viable 1031 exchange.  Here are the main rules:

  • The property involved must be held for business or investment use. All real estate is considered like-kind.  In other words, vacant land can be exchanged for commercial property, etc.
  • A Qualified Intermediary (QI) must be used to facilitate the entire transaction.  The QI is an independent third party whose only role is to facilitate the exchange and ensure that the IRS guidelines are followed.  The QI cannot be an agent or relative of the Exchanger (ie.  Attorney, Realtor, CPA, etc.).
  • In order to defer all of the capital gains and any other applicable taxes, the Exchanger must purchase a property that is equal to or greater than the Net Selling Price (NSP) of their relinquished property.  The Net Selling Price is the contract sales price minus Realtor Commissions and title closing costs.
  • The Exchanger has a total of 180 days to complete the exchange.  This means that he or she must close on all intended purchases within 180 days of closing on the sale of the relinquished property.
  • Within the first 45 days of that 180 day period, the Exchanger must identify up to 3 possible replacement properties for the exchange.  Only what has been identified by day 45 will qualify for the exchange.  No revocations or changes can be made once it is beyond the 45th day.

If the taxpayer follows these rules, they can almost guarantee a flawless exchange. An exchange can offer not only substantial tax benefits, but also provide an opportunity to diversify one’s portfolio.  Every situation has its own unique characteristics, so it is very important that taxpayers consult their tax advisors before embarking on a tax-deferred exchange.

1031 Tax Free Strategies has been serving as a Qualified Intermediary for 1031 Exchanges for over 15 years.  Please feel free to contact us anytime at 239.333.1031 with any questions that you may have regarding the exchange process.

 

Written by: Dave Owens, Managing Member of AdvantaIRA Trust, LLC.

My F******g Team – Real Estate Investment Strategies in SW Florida

Now that I have your attention, I want to tell you about my “Flipping” Team.  (What were you thinking?)  The largest fear Out-of-State Investors usually face is finding all the people needed to successfully buy, rehab, sell or lease properties in another state.  Real Estate Services of SWFL, LLC takes all the worry out of this process.

Who do you need to find the deals, rehab the property and find buyers or renters?  Our team has everyone in place to be your team.  Our experienced, licensed members include:

Our members have worked as a team for years offering efficient and professional customer service for our clients.  Every month we receive referral business from past clients.  This is the highest compliment any team can hope to receive.

The advantages of working with a team like ours is the combination of niche specialists all working towards a common goal for our client – a successful Real Estate Transaction.  Each member is highly training in their specific field.  We do not attempt to be a jack-of-all trades but rather professionals who are at the tops of their respected fields.  This group effort assists our clients to a  successful transaction with little heartache and hopefully lots of fun.

working together 2The Real Estate Market in SW Florida is one of the hottest investment markets in the United States.  Contact our team to provide you with worry free Real Estate Property Investments.  Don’t get left behind in this great time to be in Real Estate.

Check our our Team Members by clicking on their profession above.

Mike Cathell,

Broker/Owner, Investment Property Consultant
Real Estate Services of SWFL, LLC

Cell:  (239) 770-6250   Fax:  (239) 220-5508
Email:  InvestSWFL@gmail.com

Legislation Affecting Real Estate

From National Association of Realtors November, 2013 Newsletter:

Senate 3% Cap Bill Introduced
On October 28, 2013, Senators Joe Manchin (D-WV), Mike Johanns (R-NE), Carl Levin (D-MI), Pat Toomey (R-PA), Debbie Stabenow (D-MI) and Mark Kirk (R-IL) introduced S. 1577: The Mortgage Choice Act. The legislation is identical to H.R. 3211 in the House. It would make adjustments to the Truth in Lending Act’s (TILA) definition of fees and points to ensure greater consumer choice in mortgage and settlement services under the Ability to Repay/Qualified Mortgage (QM) rule. S. 1577 endeavors to restore a competitive market among lenders by clarifying and rationalizing the definition of fees and points to reduce this discrimination. By doing so, S. 1577 will ensure that consumers have greater access to mortgage credit and also more choices in credit providers. Without S. 1577, both choice and access will be severely reduced, affecting countless consumers and those who serve them. NAR is asking both the Senate and House to ensure the legislation is enacted before the QM rule takes effect in Jan. 2014.

Flood Insurance Affordability Bill Introduced
On October 29, 2013, Senators Robert Menendez (D-NJ) and Johnny Isakson (R-GA) introduced the NAR-supported “Homeowner Flood Insurance Affordability Act” (S. 1610), to delay unintended rate increases under the Biggert-Waters law and its implementation. Representatives Michael Grimm (R-NY) and Maxine Waters (D-CA) have introduced an identical bill in the House (H.R. 3370). The bipartisan measure essentially calls for a 4-year “time out” on further implementation of the rate structure until FEMA completes the affordability study required by Biggert-Waters and also proposes a regulatory solution to issues found in the study. The bill’s delay would apply to any property that is grandfathered or purchased after July 2012, including second homes and commercial properties. The other property owners will still see any rate increases capped at 20-25% a year. The bill would also create a Flood Insurance Advocate within FEMA to investigate and assist property owners with verifying the accuracy of flood insurance rate quotes. The bill was introduced with an impressive list of 15 Senate and 65 House original sponsors. NAR will continue pressing for additional co-sponsorship and urging its immediate consideration by Congress.

Vacation Homes and 1031 Exchanges

Until several recent rulings, it has been difficult to determine what the IRS expects when it comes to Vacation homes and how they are treated in the context of the 1031 exchange.  Thanks to Revenue Procedure 2008-16 and Moore v. Commissioner, we now have clear guidelines as what would qualify and what would not.  In order for your vacation home to qualify for 1031 treatment, the following criteria must be met:

During the 24 months prior to the sale of your vacation home:

  1. You must show that you have rented the property at fair market value for at least 14 days each year.

  2. You must not use the property personally for more than the greater of 14 days or 10% of the number of days the property was rented each year.

These same criteria hold true for the replacement property that you purchase should it also be a vacation home.

Here is an example:

John and Mary Smith own a Condo on Fort Myers Beach that they are getting ready to sell, and would like to do a 1031 exchange.  Here are the details on the property:

  1. Owned Condo for 7 years

  2. Condo has been in a Rental Program and rented 200 days each year

  3. Personal use is 17 days each year

Based on the criteria outlined, they cannot use the property more than 10% of the number of days that the property was rented each year, or 20 days.  Since they only used it for 17 days each year, they meet the criteria.

In addition to making sure that your personal use falls within the established guidelines, there some other steps you can take to support that your vacation property is a viable exchange property.  First, deduct any mortgage interest and property taxes on Schedule E as a business expense, as well as any repair costs, depreciation and miscellaneous expenses.  Next, make sure that it is clear from the beginning that your intention with this property is to treat it as an investment.  Finally, keep a log of what days you use it personally, what days you were doing work on the property, etc.   These are all easy steps to take to further ensure that your exchange is solid should you ever find yourself as the subject of an IRS audit.

 Theresa Knower, CISP, CES

Chief Operating Officer
AdvantaIRA Trust, LLC
1031 Tax Free Strategies, LLC
1520 Royal Palm Sq. Blvd. #320
Fort Myers, FL 33919
 
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