Check out this sunny garden level condo at 381 S. Ames Street, Unit B-105, just one mile east of the Belmar shopping district with easy access to downtown Denver. It was just listed this week for only $198,000. This recently updated condo comes with stacked washer/dryer, newer cabinets, granite countertops, and top of the line berber carpeting & ceramic tile floors. It’s affordable Lakewood living for the first-time or downsizing home buyer. This end unit comes with 2 reserved parking spaces and low HOA dues ($157/month) which include heat & hot water, a clubhouse and swimming pool! At this time, this is the only 2-BR, 2-bath condo under $200,000 in Lakewood. Find interior photos at www.LakewoodCondo.info. Andrew will hold it open Saturday, 11am – 3pm. Click on the narrated video tour below.
Come check out this 3-bed/2-bath home at 7755 W. 62nd Place, just listed for $375,000. It’s located on a quiet street just north of Old Town Arvada. This 1,421-sq.-ft. home sits on a large corner lot and features a generous main level living area and large kitchen space that opens to a newly fenced, private backyard. The upper level features the master bedroom and second bedroom plus a full bath. There is hardwood flooring under the carpet on the main and upper levels as well as on the stairs. Downstairs is a cozy family room with fireplace and a third bedroom and full bath. The carport was converted to an extra living space but could be converted back to a carport (or garage) by the new owner. Find more pictures and a narrated video tour at www.ArvadaHome.info then come to the open house on Saturday, March 9th, from 11 to 3 pm. Call your agent or Andrew Lesko at 720-710-1000 to set a showing.
Colorado owners of investment real estate have built up a lot of equity over the last several years through appreciation. Selling those properties outright would subject the seller to significant capital gains tax, but there are several strategies for deferring — and in one strategy reducing — that capital gains tax liability.
Many property owners have inquired about selling their investment property in a way that locks in their gains — including owners who are looking to exit the landlord business altogether.
Whether your rental property is a single-family home, a duplex, other multi-family dwelling, or a commercial property, you may well be looking to cash out while values are high, but how do you do so while minimizing your tax exposure? There are several strategies for doing so, but one that was created by the Tax Cuts and Jobs Act of December 2017 is particularly attractive, both for its flexibility and the fact that it allows for reduction of the deferred capital gains tax and elimination of future tax.
There are four exit strategies that simply defer capital gains tax obligations. They include the traditional Installment Sale, the Monetized Installment Sale, the Deferred Sales Trust and the Delaware Statutory Trust. By using one of these exit strategies, you can defer the amount of tax you pay on the sale of a rental property, putting your pre-tax capital to work elsewhere. A fifth tool, the Opportunity Trust Fund, created by the Trump tax bill, is likely to become every investor’s favorite. Let me explain why.
The Trump tax bill allowed states to identify “Opportunity Zones,” and Colorado identified 126 such zones, 40% of which are in the Front Range, including Denver and Jefferson County. Altogether there are now 8,700 Opportunity Zones in all 50 states, the District of Columbia, and in five U.S. territories.
If a new investment in an Opportunity Zone property — or in an Opportunity Zone Fund which invests in such properties for you — is held for 10 years, you pay no capital gains tax when you sell.
There’s a further advantage when you roll the capital gain on your current investment property into an Opportunity Zone investment, because you can sell your current property, take out your basis on that property tax-free, while rolling only your gain into an Opportunity Zone Fund. Your basis on the rolled-over gain is increased (and tax liability reduced) by 15% after 7 years, and your gain on the new investment is tax-free if you hold it for 10 years. I’m told that these tax benefits decline on investments made after 2019.
In this article, I’m only telling you what I understand from reading up on the subject, including at https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questionso. You’ll want to speak to your tax advisor before making any changes in your real estate investment portfolio.
I thank broker associate Andrew Lesko, who specializes in duplex and multi-family properties, for bringing this and the other tax-saving strategies to my attention. If you’re thinking about selling your duplex, triplex, townhome or condo, contact Andrew for a current market analysis at 720-710-1000 or visit www.DuplexAlerts.com, where you’ll find more details about all five tax deferral/reduction/elimination strategies.
If you have a commercial property to sell, call me at 303-525-1851 so I can refer you to a trusted commercial broker.
With the new year upon us, many of us are thinking about taxes. While it’s too late to strategize for 2018, let’s look at tax strategies going forward.
Owners of duplex, triplex and small multi-unit properties sell their properties for many reasons. Sometimes an owner wants to leverage equity into another property with better upside potential or a higher return on their investment or into multiple income producing properties.
Perhaps a duplex property was inherited but the responsibility of being a landlord has become overly burdensome. Whatever the situation, there are times when selling a multi-unit rental property and transferring the equity into an alternative “hands-off” type of investment makes sense. You can defer your capital gains tax obligations and keep your pre-tax capital growing for you by utilizing one of these IRS-approved options.
1031 Real Estate Exchange: The 1031 real estate exchange is a tax-deferral strategy that applies to investors who have sold or are about to sell investment real estate. This strategy allows a client to defer capital gains tax on all sales proceeds that are reinvested into other investment real estate properties, as long as the seller:
1) does not take “constructive receipt” of the funds within the exchange transaction. This means that the proceeds must go directly to a “qualified intermediary” and not at any point be in the seller’s own bank account.
2) meets all requirements outlined in the Internal Revenue Code.
721 Exchange: Less well-known than the 1031 exchange, the 721 exchange is another tax-deferral strategy which applies to investors who have sold or are about to sell investment real estate. This strategy is similar to the 1031 exchange but allows an investor to exchange his property for an interest in a diversified real estate portfolio known as a Real Estate Investment Trust (REIT). As with the 1031 exchange, the seller must not take constructive receipt of the sales proceeds within the transaction.
Delaware Statutory Trust is offered as replacement property for those seeking to defer capital gains taxes via a 1031 exchange. The DST allows for fractional interest ownership in various managed commercial properties with other investors, as individual owners within a Trust. Each owner receives a share of the cash flow income, tax benefits, and appreciation of an entire property. There is potential for annual appreciation and depreciation. Investments begin at $100,000 and allow investors to diversify into several properties.
Deferred Sales Trust is a tax-deferral strategy that applies to many different capital gains situations. These include the sale of a business, real estate, stocks, or bonds, as well as the maturity of principal on a note or carry-back, and even applies in certain debt forgiveness situations. The Deferred Sales Trust is different from the 1031 and 721 exchanges in that it does not require any reinvestment of the sales proceeds into real estate. It is similar to 1031 and 721 exchanges insofar as an investor cannot take constructive receipt of the funds within the transaction.
For expanded, detailed information on each of these tax strategies, visit www.DuplexAlerts.com and click on the “Sellers” tab in the main menu.
Always consult with your tax or wealth management professional when considering the sale or purchase of an investment property.
A quick caveat: Neither I nor any agent at Golden Real Estate is a CPA or tax advisor. Broker associate Andrew Lesko did the research for this article. Email Andrew at Andrew@GoldenRealEstate.com or 720-710-1000 with your questions or comments.
Located at 10456 W. Dartmouth Ave. in the highly sought-after townhouse community of Pheasant Creek, this is a great opportunity for first-time home buyers! Bring your design ideas and make this home yours. This is currently the lowest priced Lakewood townhouse with a garage! Features include a main-level living room with wood burning fireplace, dining area and a smart kitchen space that accesses the deck — great for summertime BBQ’s! The two spacious bedrooms upstairs share a full bath. The basement has an 80-sq.ft. unfinished room behind the garage with included washer and dryer (and furnace and water heater). This townhome is move-in ready. Community amenities include a pool and basketball court. Close to trails, parks, restaurants and shopping. This is a great starter home in a great location and is priced to sell quickly! View the narrated video tour online at www.LakewoodTownhome.info, then call your agent or Andrew Lesko at 720-710-1000 for a private showing. He’ll be holding an open house on Saturday, May 5th, 11 am to 3 pm. See also www.GoldenTownhomes.com.