An Exceptional Exchange Experience, Made Easy. |
|
|
"Immediate Supply"
A "Simple Fix" to Primary Residence Sales Could Ease Housing Woes
|
“Due to the significant tax bills they would face, far fewer older homeowners are selling their residences to downsize or move to retirement facilities, increasing demand and prices and leaving fewer homes available for younger home buyers to purchase,” said Kenny Parcell, 2023 President, National Association of REALTORS® (NAR) (Panetta). Prohibitive tax bills on large capital gains on primary residence sales are impacting the residential market, contributing to issues of housing affordability, inventory available to the market, and a homeowner’s ability to downsize.
Increasing the capital gains exclusion amount on the sale of primary residences is "something that could bring immediate supply to the market,’ said Lawrence Yun, chief economist at NAR (Morningstar).
The Section 121 Primary Residence Exclusion, sometimes called the Home-Sellers’ Exemption, is part of the Internal Revenue Code that allows a homeowner to exclude gain on the sale of a primary residence. When selling a primary residence, married couples filing jointly can exclude up to $500,000 and single filing taxpayers can exclude up to $250,000 of gain from their taxable income on the appreciation of their home at sale.
Proponents are calling for an increase in the value of the exclusion for taxpayers.
|
|
Where Section 1031 works with capital gains on investment and business property, the Section 121 Exclusion exempts up to $500,000 in gain on the sale of a primary residence.
Proponents say an increase in the amount of the exemption could provide housing supply and help with affordability.
|
|
Section 1031 Rules: Holding Title |
|
Title on the replacement property must match title on the relinquished property for an exchange to qualify. |
|
Understanding the Same Taxpayer Rule |
To meet the same taxpayer requirement of Section 1031, and for an exchange to qualify, title to the replacement property must be taken the same way it was held on the relinquished property. This rule applies to any taxpayer, from an individual to an entity such as a partnership, LLC, trust, or corporation. Since an exchange is considered a continuation of the original investment in the relinquished property, title must reflect that continuation on the replacement property.
As with many rules, however, there is one exception: the use of a disregarded entity for tax purposes. In a disregarded entity, such as a single-member limited liability company (LLC), the business entity is not separate from its single-member owner and the underlying taxpayer remains the same. In this case, the entity does not file a separate tax return. Instead, any income, expenses, and/or loss is reported on the single-member owner’s tax return.
Other examples of disregarded entities include the following:
- An Illinois Land Trust
- A Revocable Living Trust, and
- A Delaware Statutory Trust.
Our Exchange Team is well-versed in the requirements of Section 1031 and the exchange process. We welcome your questions!
|
|
Upcoming Webinars
>> Thursday, August 3, 2023
12:00 Noon Eastern
>> Thursday, September 7, 2023
12:00 Noon Eastern
|
|
1031 CORP. provides an easy-to-follow overview of 1031 tax-deferred exchanges and their many benefits. We'll also review the requirements of a successful exchange and the essential role of 1031 CORP. to keep the exchange transaction simple for all parties and wrap up with questions and answers. |
|
|
Schedule a 1031 Presentation |
|
The 1031 CORP. Exchange Team is available to present seminars, webinars, and continuing education courses on 1031 exchanges, their many benefits, and the requirements of a successful exchange to your association or groups.
Our team will tailor the presentation to your audience and time schedule.
|
|
|
|
Yahaira Dillen
Exchange Coordinator,
Team Cindi
1031 CORP.
Orlando, Florida
(610) 792-4880 ext. 248
|
|
Yahaira Dillen
Role: Exchange Coordinator
Location: Orlando, Florida & Collegeville, Pennsylvania
What trends do you see in your clients?
All exchanges are different, so I build relationships and work to understand a client’s unique circumstance. Clients who are experienced with 1031 exchanges generally know what they want. They’ve spoken with their tax advisors and are educated about the rules. We often talk about the 45-day identification window. Many need to know about options when an identification can’t be made (funds can be recalled) or fallback strategies, like investing in a Delaware Statutory Trust (DST).
What makes 1031 CORP. a quality Qualified Intermediary?
Our team is focused on providing an exceptional experience, which includes deep expertise in the exchange process and attention to our clients’ individual needs. 1031 CORP. specializes solely in 1031 exchanges, so we have to know the exchange process inside and out. The team talks quite a bit about best practices, too. We are members of the industry trade association, the Federation of Exchange Accommodators (FEA), and have several Certified Exchange Specialists® on staff. In addition, our fees our fair—and without surprise fees—and our service is outstanding.
|
|
Poll: Will rents rise in the next 6 months? |
|
|
Please select only one answer. Poll results will be reported next month.
|
|
It will depend on several factors.
|
|
|
|
|
|
|
Poll: Do buyers feel pressure to buy? |
|
Your poll answers from the June issue of Exchanging Times
|
|
Serving as a nationwide Qualified Intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP. strives to provide an exceptional exchange experience for our clients and their advisors. We provide our clients with enhanced security of funds, knowledgeable exchange professionals and a commitment to keep the exchange process simple for our clients and their advisors. Our Exchange Team, which includes Certified Exchange Specialists®, has the experience and expertise to facilitate even the most complex exchange transactions, including reverse and improvement exchanges.
|
|
|
|
|
|
|
|
