J.K. Lasser's Real Estate Investors Tax Edge Top Secret Strategies of Millionaires Exposed

by Estill, Scott M.; Long, Stephanie F.

• ISBN13: 9780470443477
• ISBN10: 0470443472
• Edition: 1st
• Format: Paperback
• Copyright: 2009-11-09
• Publisher: Wiley

Summary

Top tax guidance for today's turbulent real estate marketDespite the downturn in the real estate market, savvy investors can continue to capture profits by using money-saving tax strategies.In The Real Estate Investor's Tax Edge, authors Scott Estill and Stephanie Long provide all of the necessary tax planning techniques to lower your tax bill and fully capitalize upon your real estate investments. In addition to this, you'll learn how to protect your assets and avoid losses in a down market through smart tax planning strategies. Containing the most updated tax law information, and offering tax-planning tips geared toward today's real estate market, this reliable resource is a complete guide to managing your real estate taxes. Outlines effective strategies for legally reducing the impact of taxes on your real estate assets Offers detailed coverage of the newest tax laws and rules affecting real estate Focuses on tax smart techniques for making the most of your real estate investmentsIn today's volatile real estate market, it's important to make the most of your assets by paying the legal minimum in taxes-no more and no less. The Real Estate Investor's Tax Edge will show you how to achieve this goal, and put you in a better position to profit during even the most difficult of times.

Author Biography

Scott M. Estill, Esq., is a Partner at Estill Long, LLC, where he specializes in advising business owners on the business and tax law issues that they may encounter. A former senior trial attorney for the IRS, he has counseled thousands on tax techniques and is nationally recognized as one of the top tax advisors in the country. Estill is also Vice President of REITS, inc., and President of Tax Strategies and Solutions, companies that provide educational services to both business owners and real estate investors. Stephanie F. Long, Esq., is a Partner at Estill Long, LLC. In addition to providing tax planning and business advice, she advises clients who are experiencing issues with the IRS or their state taxing agencies. A frequent national seminar speaker, lecturer, and instructor at various events and colleges across the country, Long has helped thousands to implement business and tax planning techniques important to real estate investors and business owners. Long is also President of REITS, Inc., a company that provides educational services to both business owners and real estate investors.

Table of Contents

Warning	p. ix
Introduction	p. xi
Understanding Capital Gains	p. 1
What Is a Capital Asset?	p. 1
Capital Gains Tax Rates	p. 3
Holding Periods for Capital Assets	p. 4
Multiple Holding Periods	p. 7
What Is "Basis"?	p. 7
Settlement, Closing, or Housing and Urban Development (HUD) Costs	p. 10
Sales of Business Property (Noncapital Property)	p. 16
Cancellation of Debt	p. 20
Conclusion	p. 21
Your Personal Residence	p. 23
Home Mortgage Interest Tax Rules	p. 23
Real Estate Taxes	p. 26
Exceptions to the Two-Year Rule	p. 30
How to Compute Reduced Capital Gain Exclusion	p. 34
Vacant Land	p. 35
Converting Rental Property to Your Personal Residence	p. 36
The Home Office and Exclusion of Capital Gains	p. 36
Sale of a Home in the Year of Divorce	p. 37
Unmarried Couples and the Exclusion	p. 37
Sale of a Home in the Year of Death of One Homeowner/Spouse	p. 38
Incapacity	p. 38
First-Time Homebuyer Credit	p. 38
Loss on the Sale of a Personal Residence	p. 39
Tax-Free Rental Income	p. 39
Foreclosure of Primary Residence	p. 39
Conclusion	p. 40
Deductions for Rental Property	p. 41
What Is Rental Income?	p. 41
Common Rental Property Tax Deductions	p. 43
The Real Estate Professional and Rental Property Losses	p. 62
Tax Credits for Rental Properties	p. 66
Recordkeeping Requirements for Rental Properties	p. 67
Conclusion	p. 68
Like-Kind Exchanges and Section 1031	p. 69
Simultaneous Exchanges	p. 71
Deferred (Nonsimultaneous) Exchanges	p. 72
The Identification Period	p. 73
Reverse (Starker) Exchanges	p. 76
How to Permanently Eliminate the Gain on the Transfer of Property Through a Like-Kind Exchange	p. 83
Losses	p. 86
Real Estate Dealers	p. 86
Business Entities	p. 86
Tenant-in-Common Interests and Like-Kind Exchanges	p. 87
Last-Minute or Broken Exchanges	p. 88
Related-Parly Issues	p. 89
Basis of Property Received	p. 90
Refinancing	p. 91
Sale Expenses	p. 91
When Not to Use a Like-Kind Exchange	p. 93
Conclusion	p. 93
The Dealer Issue	p. 95
What Is a Dealer?	p. 95
Tax Consequences of Being a Dealer	p. 96
Tax Planning Strategies	p. 101
Conclusion	p. 105
Installment Sales	p. 107
What Is an Installment Sale?	p. 107
Installment Sales Between Related Parties	p. 110
Opting Out of Installment Sale Reporting	p. 114
Installment Sale of Your Primary Residence	p. 115
Use of Escrow Account for an Installment Sale	p. 115
Considerations Related to Installment Sales	p. 116
Default Under Installment Agreements	p. 17
Conclusion	p. 119
Passive Activity Rules Related to Real Eatate	p. 121
Participation	p. 123
Modified Adjusted Gross Limitation	p. 125
Former Passive Activities	p. 131
At-Risk Limitations	p. 134
Dispositions and Installment Sales	p. 135
Conclusion	p. 136
Trusts, Trusts, Trusts!	p. 137
Land Trusts	p. 137
Private Annuity Trusts	p. 140
Charitable Remainder Trusts	p. 142
Conclusion	p. 145
Individual Retirement Accounts	p. 147
IRA Rules and Plan Types	p. 147
Necessary Steps to Using an IRA for Real Esta	p. 152
Buying Notes or Liens in an IRA	p. 153
Prohibited Transactions with Real Estate in a Retirement Account	p. 153
The Use of Financing in an IRA	p. 154
Conclusion	p. 155
Depreciation Issues with Real Estate	p. 157
How Is Basis Computed?	p. 158
What Is the Recovery Period for Property Subject to Depreciation?	p. 159
What Methods of Depreciation Are Available?	p. 162
Depreciation Rates for New Property	p. 163
Component Depreciation	p. 166
Section 179 Deductions	p. 170
Must Depreciation Be Claimed?	p. 170
Conclusion	p. 172
Business Entities and Real Estate Inve	p. 173
The C Corporation	p. 173
The S Corporation	p. 180
The Limited Liability Company (LLC)	p. 186
The Limited Partnership	p. 188
Conclusion	p. 194
Conclusion	p. 195
IRS Tax Forms	p. 197
Checklists and Forms	p. 261
Notes	p. 263
About the Authors	p. 271
Index	p. 273
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