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1031 Exchanges allow investors in real estate to defer the capital gains tax when exchanging "like-kind" property. The investor must exchange for real estate of equal or more value and needs to follow a number of rules & guidelines.
The Flexibility of 1031 Exchange. A 1031 exchange can be performed within one state or between different states. This allows great flexibility with ones investment in rental property. Suppose one owned 4 rental properties in a depressed real estate market. That individual could sell the 4 rental properties & use the proceeds as a down payment towards a small apartment building in a hot real estate market. This process would allow the investor to increase their leverage & potential for increased appreciation over the years to come.
Internal Revenue Code, Section 1031, states that neither gain nor loss is recognized if property held for investment or for productive use in a trade or business is exchanged for property held for investment or for use in a trade or business. There are several types of 1031 exchange methods used today, including delayed exchanges, simultaneous exchanges, and reverse exchanges.
6. What is a Two to Four Family Property?A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.7. What is a Private Second Mortgage?Where you obtain a second loan to cover your down payment on a primary mortgage loan.Here is a glossary to help you with other terms you might not be familiar with.For other questions, please contact us.SELLERS:1. How do we get our home into the MLS?After you call us to schedule a listing appointment, we will drop off a pre-listing packet that explains the process. At the listing appointment we will go over that packet and explain our services. Once the listing is signed, your home will be entered into the MLS and showings will begin.2. What should we do to prepare our home for showings?We will walk through your home at the time of listing and make suggestions. In general you should be prepared to make your home sparkle inside and out. That may mean painting, cleaning windows, planting flowers and cleaning out closets.3. How long will it take to sell my home?The time on the market is dependent on several factors including price, condition and location. At the time of listing we can give you information as to how long other homes in your area spent on the market before being sold.4. When do I have to move out?The day of possession for the buyer is negotiated in the contract. You will know the day you have to move out on the day the contract is signed.5. What are Real Estate Capital Gains?Generally speaking, this is the difference between the sales price of the Relinquished Property less selling expenses and the adjusted basis of the property.6. What is a Lease Option?An alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price. If you´re looking for a way to maximize your price, this is a good strategy. Find a renter who wants to buy but cannot qualify for traditional lending. In the lease option contract, you can offer to apply some of the rent toward the purchase, agree on a higher-than-market rental rate, and negotiate the terms of the future sale at a precise point in time.7. What is a Lien?A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.8. What is a Sale-Lease Back? A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.9. What is a Seller-Carry Back?An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.Here is a glossary to help you with other terms you might not be familiar with.For other questions, please contact us.
REAL ESTATE ACRONYMS:Question:What do all of those real estate acronyms in the ads Mean?Answer:If you find yourself stumbling over weird acronyms in a real estate listing, don't be alarmed. There is method to the madness of this shorthand (which is mostly adopted by sellers to save money in advertising charges). Here are some abbreviations and the meaning of each, taken from a recent newspaper classified section:
* assum. fin. -- assumable financing* dk -- deck * gar -- garage (garden is usually abbreviated "gard")* expansion pot'l -- may be extra space on the lot, or possibly vertical potential for a top floor or room addition. Verify actual potential by checking local zoning restrictions prior to purchase.* fab pentrm -- fabulous pentroom, a room on top, underneath the roof, that sometimes has views* FDR -- formal dining room (not the former president)* frplc, fplc, FP -- fireplace* grmet kit -- gourmet kitchen* HDW, HWF, Hdwd -- hardwood floors * hi ceils -- high ceilings* In-law potential -- potential for a separate apartment. Sometimes, local zoning codes restrict rentals of such units so be sure the conversion is legal first.* large E-2 plan -- this is one of several floor plans available in a specific building* lsd pkg. -- leased parking area, may come with an additional cost* lo dues -- find out just how low these homeowner's dues are, and in comparison to what?* nr bst schls -- near the best schools * pvt -- private* pwdr rm -- powder room, or half-bath * upr- upper floor * vw, vu, vws, vus -- view(s) * Wow! -- better check this one out.
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Rooftop RealtyMack and Andi Durbin3650 S. Federal Blvd #178Englewood, CO 80110Phone: 303-881-8844info@RooftopRealty.com