1031 Tax Deferred Exchanges
Thanks to IRC Section 1031, a properly structured 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes. IRC Section 1031 (a)(1) states:
“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”
To understand the powerful protection a 1031 exchange offers, consider the following example:
- An investor has a $400,000 capital gain and incurs a tax liability of approximately $140,000 in combined taxes (depreciation recapture, federal capital gain tax, state capital gain tax, and net investment income tax) when the property is sold. Only $260,000 in net equity remains to reinvest in another property.
- Assuming a 25% down payment and a 75% loan-to-value ratio, the investor would only be able to purchase a $1,040,000 replacement property.
- If the same investor chose to exchange, however, he or she would be able to reinvest the entire gross equity of $400,000 in the purchase of $1,600,000 replacement property, assuming the same down payment and loan-to-value ratios.
As the above example demonstrates, 1031 exchanges allow investors to defer capital gain taxes as well as facilitate significant portfolio growth and increased return on investment. In order to access the full potential of these benefits, it is crucial to have a comprehensive knowledge of the exchange process and the Section 1031 code. For instance, an accurate understanding of the key term like-kind – often mistakenly thought to mean the same exact types of property – can reveal possibilities that might have been dismissed or overlooked. We work closely with several attorney’s on 1031 tax deferred exchanges. We understand the process, the due diligence, and are often able to perform above our clients expectations in finding replacement properties.
EB-5 Regional Center Investment Strategists
TIZON Commercial's experienced team of domestic and international attorneys, economists, business plan writers, and marketing professionals has successfully obtained USCIS approval for many prosperous EB-5 Regional Centers and EB-5 Projects. We would like to be the "go-to" team for your EB-5 objectives. TIZON has the task force you need to obtain an EB-5 Regional Center, we will work with you to accomplish the following:
- Develop the EB-5 Business Plan for your Project and Regional Center
- Perform the economic study through our world-renowned EB-5 Economists
- Determine the appropriate job creation model for your Project
- Structure the EB-5 Offering Documents for marketability with the EB-5 Investors
- Develop the complete EB-5 Marketing Plan, using strategies to raise capital from foreign investors
TIZON's strategic Team partnership of attorneys regularly travels the world to promote EB-5 Regional Center Projects. They monitor the pulse of the EB-5 market, and are able to structure your EB-5 Regional Center and EB-5 Project to ensure its attractiveness to the foreign investor. Careful attention to the details of your Project will set it apart from the competition, offering global advantage to your Regional Center for applicants looking to immigrate to the United States through the EB-5 Investor Visa Program.