November / December 2019
Related Parties’ Property Exchange Doesn’t Qualify as Like-Kind  
Like-kind exchanges under Internal Revenue Code Section 1031 provide a valuable tool for taxpayers to defer taxes on capital gains. The exchanges are subject to some strict rules that are intended to prevent tax avoidance scams.

This article discusses a recent U.S. Tax Court case in which the parties to a like-kind exchange ran into one of those restrictions — the related-party limitation — and ended up with a higher-than-expected tax bill. A short sidebar reviews how the Tax Cuts and Jobs Act (TCJA) affected like-kind exchanges.

LLCs: How Limited is Your Liability?
Many real estate investors hold title to their investment properties through a limited liability company (LLC). While LLC rules vary by state, this structure protects real estate investors from personal liability beyond the member’s equity investment.

An LLC’s administration is fairly uncomplicated, and it offers potential tax benefits. However, this article reminds readers that liability protection under an LLC isn’t unlimited, and the Tax Cuts and Jobs Act (TCJA) made both positive and negative changes to the tax rules that affect LLCs.

Multifamily Developers May Want to Consider Short-Term Rentals
Developers of multifamily projects are always looking for innovative ways to reduce vacancies and improve cash flow.

This article examines how savvy developers in urban markets with an oversupply of multifamily housing and/or an under-supply of hotel rooms can benefit from a nontraditional tool to accomplish these goals: short-term rentals.

Valuation Matters
Appraisers apply four tests to determine highest and best use
An important factor for an appraiser to consider when valuing real property is its “highest and best use.” This may not necessarily be its current use, though. The Appraisal Institute defines highest and best use as “the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible and that results in the highest value.”

This article reviews the four tests appraisers typically apply to determine that use.

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