earldom gwenora: Purchasing Property to Avoid Taxes

Sunday, February 12, 2012

Purchasing Property to Avoid Taxes | Finance Help News

Purchasing Property to Avoid Taxes

President Obama extended Bush?s tax cuts in December of 2010, which means that dividend tax rates and the capital gains tax rate will stay at 15% through the end of 2012. Barring another extension of Bush?s cuts, those taxes will increase in 2013.

When you do a proper 1031 exchange, you?ll qualify for zero capital gains taxes. But new investors must be aware of all the cut off dates and limits imposed on 1031 exchanges to do them in the correct way. Missing one of the two necessry cut off dates, selecting replacement property poorly or making other mistakes that may jeopardise the 1031 exchange, might result in the need to pay capital gains tax on property sales.

1031 Investments and Capital Gains

In a tax change that can affect those buying and selling assets that equal $500,000 or even more, with some of the people participating in 1031 exchanges who could be affected, the quantity of assets that can be written off is going to drop dramatically in 2012, and plunge in 2013.

The write-off rules that permit up to $500,000 was extended last year until the end of 2011, but the maximum amount of assets? costs that you will be able to deduct off in 2012 will be $125,000. In 2013, the maximum that may be written off will only be $25,000. This is about to make an alarming change in numerous people?s tax bills.

Assets and Depreciation

Obama?s extension also continued the bonus depreciation of assets through the end of 2011. If that isn?t extended, then the quantity of the asset that can be written off under this bonus will possibly cut in half in 2012.

As of right now, property that was bought after September 8, 2010, and bought before the end of 2011, qualify for this bonus depreciation extension. The write-off can be 100% of the asset, provided it was purchased in this window. Outside this window of time, depreciation write-offs offer only 50%.

It is beneficial to be conscious of tax laws and imminent changes so that you can make sensible investment calls. For full information on NNN Properties and 1031 investment property, visit 1031investmentopportunity.com as soon as possible.