Donald Trumps wanted in Florida

Donald Trumps wanted in Florida

In the old days -- we're talking early in Ronald Reagan's first term here -- there were tax shelters galore for investors, especially in real estate. Why, at one point if you put money into certain types of property development Uncle Sam would give you triple credit for it.

Most of those shelters were blown away, starting with the tax reform of 1986 and in subsequent tax bills. But one important tax break has survived for investors in income-producing properties: the 1031 exchange.

A 1031, or Starker exchange as it is also known, allows a real estate investor to defer the capital-gains taxes on a sale by trading for another "like kind" property of equal or greater value. In that way it works like the old tax provision that allowed you to defer any capital gains on the sale of your principal residence by trading up -- until after age 55 you could take a one-time exclusion.

The beauty of the 1031 exchange is that tax authorities have interpreted "like kind" so broadly that in essence you can trade any kind of income property for another -- a strip shopping center for a garden apartment building, for example. And you can keep trading one appreciated property for another for you entire lifetime if you want. (Alas, there is no one-time exclusion on gains for older 1031 users.)

There are specific rules and procedures investors must follow in order to take advantage: you only have a limited time in which to designate the property for the exchange and the sales proceeds from your original property must be held outside of your control by a trustee, for instance. But the burden is not onerous and there are specialists in these trades that you can hire to handle the whole process for you.

The logic of providing such a tax break may have been to provide for more orderly property markets, encouraging investors to keep up the flow of capital.

But with the leverage that can often be had in real estate -- for many types of income properties 30% down is all you need -- the 1031 has also given mom-and-pop investors who may have started with nothing more than a two-flat the chance to become Donald Trumps in their own right.

For more information on how to potentially become the next Donald Trump in real estate, please call or visit http://www.MiamiJustListed.com and let C21 MiamiJustListed.com' Broker Associate, Katerina Brosda help you to build your real estate portfolio.

About Katerina Brosda

Katerina Brosda is a preeminent negotiator dominating by far her industry and field of expertise. As the sole principal at MiamiJustListed.com Ms. Brosda is charged with the day-to-day operations of a boutique real estate services and development firm that caters to the haves and wants of an international upscale clientele in the greater Miami area and in particular on the beaches. Ms. Brosda is recognized by the largest real estate services firm in the world, Century 21, as one of its most successful and outstanding professionals. Ms. Brosda's firm is located in chic Sunny Isles Beach, Florida, a barrier reef island in North Miami Beach. 

About Century 21 Real Estate LLC

Century 21 Real Estate is the franchisor of the world's largest residential real estate sales organization, providing comprehensive training, management, administrative and marketing support for the CENTURY 21 System.  The System is comprised of more than 7,800 independently owned and operated franchised broker offices in 42 countries and territories worldwide. Century 21 Real Estate LLC is a subsidiary of Realogy Corporation (NYSE: H), the world's largest real estate franchisor.

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