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TOPIC: Re:save money on taxes
#4327
Douglas ()
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save money on taxes 5 Years, 1 Month ago Karma: 1  
Since i started this forum i will start the first discussion.

Reinvest your money on a sale on more property to avoid paying taxes:

good idea or not
 
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#4328
Michael ()
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Re: save money on taxes 5 Years, 1 Month ago Karma: 0  
1031 Exchange

Depends on your individual goals.

If at that moment you are looking for another property yes. If you want to pay down current properties debt service, no.

My answer, it depends on how my month is going. I prefer to pay down debt, which increases my cash flow, equity and net worth. If the 1031 gave me enough to buy something with out a mortgage, I would buy it.
 
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#5598
LindaP ()
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Re:save money on taxes 4 Years, 1 Month ago Karma: 5  
BTO429 wrote:
Since i started this forum i will start the first discussion. Reinvest your money on a sale on more property to avoid paying taxes: good idea or not
While I agree, I wanted to point out the there is a very strict way to roll your profit over into the next property, using a 1031 or "like kind exchange" and deferring the income taxes. You need to identify the next purchase at the time of the sale and it's also imperative you get a "qualified intermediary" to hold the funds from one sale for you until you close on the next. Eventually, when you sell a property that has had the profit rolled into the purchase, it's at that time you pay taxes on it all, so you don't really avoid paying taxes, you just defer paying taxes.
If you don't do things exactly, the IRS could reject the 1031 and want you to pay the taxes.
 
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