401kcheckbook.com

Final opportunity for investors and entrepreneurs to tweak 2023 tax results using retirement account contributions.

Tax-favored retirement account contributions can substantially reduce your tax bill while creating opportunities for tax-free ROI.

Following is a link to ReSure's online and interactive calculator to help you with your 2023 tax planning.

(2024 Calculator to be shared in a subsequent email.)

The calculator helps you compare, contrast, and strategize for the following tax-advantaged retirement accounts:
▶️Solo 401(k)
▶️SEP-IRA
▶️SIMPLE-IRA
▶️Profit-Sharing Plan

https://www.resurefinancial.com/solo-401k-qrp-max-contribution-calculator-2023/

Checkbook Solo 401K, QRP, SEP IRA, SIMPLE IRA, Profit Sharing: Max Contribution Calculator 2023 - ReSure Financial QRP, 401k, Solo 401(k), SEP-IRA, SIMPLE-IRA Max Contribution Comparison Self-employed individuals and businesses employing only the owner, partners and spouses have several options for tax-advantaged savings: an Individual 401(k) plan, a SEP IRA, a SIMPLE IRA, or a Profit Sharing plan. Each option h...

📢Real Estate Tax Bulletin: 100% Bonus Depreciation is no longer close to coming back😞

The Tax Relief for American Families and Workers Act of 2024, containing attractive real estate tax provisions, passed the House in January 2024 with strong bi-partisan support and was expected to become law.

Unfortunately, as of August 1, the Senate failed to pass the TRAFWA by a vote of 48 to 44. 60 votes were required for it to pass the Senate.

Key provisions of the bill, impacting real estate:
▶️100% bonus depreciation through the end of 2025
▶️Increasing interest tax deductions
▶️Increasing Section 179 tax deductions

At this stage, it's unlikely that there will be any significant tax legislation passed until after the November 2024 election.

https://members.resurefinancial.com/posts/the-trafw-act-of-2024-what-real-estate-investors-need-to-know-and-do

The TRAFW Act of 2024: What Real Estate Investors Need to Know and Do Status update, 8/1/24 : Unfortunately, the Senate failed to pass the American Families and Worker’s Act of 2024 (TRAFWA) by a vote of 48 to 44 (it required 60 votes to pass). The Tax Relief for Ame...

What's the Standard 1031 Exchange Process?

After much content regarding complexities and nuances of 1031 exchanges - it's a good idea to "Zoom out" and provide a bird's-eye view of the standard, uncomplicated 1031 exchange process.

👉Prior to closing the sale of the Relinquished Property
▶️Exchanger and Qualified Intermediary must enter into an Exchange Agreement.

▶️Exchanger must assign its rights under the Relinquished Property sale contract to the Qualified Intermediary.

▶️All parties to the sale contract must be notified, in writing, of the assignment.

👉Closing of the Relinquished Property
▶️Title is conveyed directly to the buyer.

▶️Net proceeds from the Relinquished Property sale (the "Exchange Funds") are paid directly to the Qualified Intermediary, to be held for the benefit of the Exchanger until used to purchase Replacement Property.

👉1031 Exchange Identification Timing: 45 Days
▶️An Exchanger has 45 calendar days, from the date the Relinquished Property is transferred, to identify potential Replacement Properties.

▶️After day 45, the Exchanger only the identified properties may be acquired as eligible replacement property.

▶️Identification must be specific and unambiguous, in writing, signed by the Exchanger, and delivered - prior to the end of the 45-day Identification Period - to the Qualified Intermediary or certain other parties to the transaction [Treas. Reg. §1.1031(k)-1(c)(2)].

▶️The list of identified potential Replacement Properties cannot be changed after the 45th day.

▶️If no property is identified, the Exchange Funds will be returned to the Exchanger after the 45th day.

👉Prior to closing the sale of the Replacement Property
▶️The Exchanger must assign its rights under the Replacement Property purchase contract to the Qualified Intermediary.

▶️All parties to the purchase contract must be notified, in writing, of the assignment.

▶️The Exchanger authorizes the Qualified Intermediary to wire funds directly to the seller or closing agent for purchase of Replacement Property.

👉Closing of the Replacement Property
▶️Title is conveyed directly to exchangor.

👉1031 Expiration Timing: 180 Days
▶️Acquisition of Replacement Property must be completed by the earlier of:
⏩the 180th day after transfer of the first Relinquished Property or
⏩the due date (including extensions) for filing the Exchanger’s tax return.

(Important tip: If you're in middle of an exchange started in a prior tax year, get a tax filing extension.)

▶️Any unused Exchange Funds are returned to the Exchanger at expiration of the exchange.

While there a myriad of details to address in every exchange, understanding the broad overview of the standard exchange process helps everything fall into place.

What are the key numbers you need to know for 1031 Exchanges?

Understanding the 1031 exchange tax calculations opens the door to executing tax & financial strategy for superior outcomes. So, follow along and reap the benefits!

▶️Rule No. 1 - What's needed to avoid taxation:
To completely avoid taxes at the time of 1031 exchange, both the VALUE and EQUITY in the replacement property must be at least equal to the VALUE and EQUITY in the relinquished property, unless offset by eligible "EXCHANGE EXPENSES."

▶️Rule No. 2 - 1031 Taxable Gain Recognition:
To the extent that either VALUE or EQUITY in replacement property is less than VALUE or EQUITY in the relinquished property, you are taxed on the GREATER OF:
the trade down in value (minus exchange expenses) and
the trade down in equity (minus exchange expenses).
BUT, only up to the amount of gain realized through the 1031 exchange.

▶️Rule No. 3 - Replacement Property Tax Basis:
Your tax basis in replacement property equals the FMV (i.e., purchase price), less the amount of gain deferred through the 1031 exchange.

How does a trade down in equity happen?🤷‍♀️
A trade down in equity happens when an exhangor receives 1031 "boot" - some form of proceeds from the relinquished property sale that is not like-kind replacement property. This may be cash, a note, or other property that does not qualify as like-kind replacement property in the exchange.

How does a trade down in value happen?🤷‍♀️
A trade down in value happens when an exhangor acquires replacement property of lesser value than the relinquished property by reinvesting all of the equity from the relinquished property but incurring less debt for the replacement property than the amount of the relinquished property debt. In such a case, there will be a trade down in value, but not in equity.

So, what are EXCHANGE EXPENSES that reduce taxable gain? Stay Tuned!🎧