1031 exchange
The properties exchanged must be considered _______ by the IRS. This means they must be used for the same purpose, such as business or investment. For example, a seller of raw land can exchange it for a rental home
Like-kind
Ammount of money pocketed by an investment each month
Cash Flow
Loan costs associated with owning the property
Carrying Costs
A person or entity who is named in a will or trust to receive assets
Beneficiary
Owner occupant is moving out of a house across the country. What tax advantage do they have if they sell right now
Joe exchanged a property into a cheaper property. The left over proceeds are called
Boot
Money spent on improvements that extend the life of the investment
Capital Expenditure
Value of the property once work is complete
ARV- After Repair Value
This takes place marking the value of the home when the owner dies
Time Of Death Appraisal
Joe who is 85 is thinking about moving from The Bay Area to Sacramento to be closer to his grandkids. His current plan is to rent his house out because he has such a low tax basis. What property tax strategy can be implemented
Prop 19
the cost or value of an asset – used to determine equity or ownership for the purpose of tax assessment, exchange, or sale
Tax Basis or Basis
NOI/ Purchase price
Cap Rate
Net profit between costs and sold price
Margin
is the legal process that takes place after someone dies to transfer property and distribute assets to beneficiaries
Probate
Jill has a single family home worth 2MM that she owns free and clear. She makes $4000 in rent per month. What strategy can be used to swap her property into a better cashflowing asset
1031 Exchange
An exchange where the exchange property is purchased first, then the primary property is sold
Reverse 1031 Exchange
Annual pre tax cash flow / Cash invested
Cash on Cash return
Pay escrow up front during purchase and it will save escrow fees when you re-list with that escrow company
Binder
A person or entity designated in a will and appointed by the court to manage and settle the estate of a deceased person
Executor
Jill (67) wants to move from her owner occupied property worth $2,000,000 to a smaller home in the same area worth $1,500,000. Her basis on her current home is $800,000. What would her new basis be under prop 19
800,000
the property you are relinquishing is called the ____, while the property you are acquiring is called the upleg
downleg
Gross Revenue - Operating Expenses
NOI or Net Operating Income
Short term loans that can cover acquisition and remodel costs. Usually a much higher rate.
Hard Money or Private Lending
an individual person or member of a board given control or powers of administration of property in trust with a legal obligation to administer it solely for the purposes specified
Trustee
James inherited his dads house. Hes concerned about selling "for tax reasons"
The original basis for the property was $150,000
The time of death appraisal was $1,100,000
How much capital gains tax would James be exposed to if he sold the house for $1,075,000
No Capital Gains