Finance Tax Time

A 1031 exchange is defined under section 1031 of the Internal Revenue Code. This code states that if an asset, usually some kind of real estate like land or building, is sold and the proceeds of the sale are reinvested in a similar kind of asset, then no gain or loss is recognized, permitting the deferment of capital gains taxes. A 1031 exchange is also called Like Kind exchange.

If an investor buys a commercial property and sells the property profitably after a period of time, he has to pay capital gains tax on that amount. But if the investor invests the amount in another commercial real estate, then he is not required to pay any tax, in which case, he defers his taxes till a later date.

To qualify for a 1031 exchange, both the relinquished property and the replacement property must be held for investment or for productive use in some business. You cannot exchange a personal residence. Once the investor decides to pursue a 1031 exchange, a Qualified Intermediary (QI) has to handle the proceedings. Then the commercial property is put on the market and the offer to buy the property is accepted. Escrow for the sale is opened and a preliminary title report is produced. The QI sends the necessary exchange documents to escrow closer for signing at property closing. Within the initial 45 days after the close of escrow on the sale of the handover property, the investor has to identify a replacement property as per law. Within 180 days after the close of escrow on the sale of the relinquished commercial property, the investor closes on replacement property that was identified by them, thus completing the exchange.

The most difficult part of 1031 exchange is the identifying of replacement property by the investor within a period of 45 days following the sale of the commercial property. The Internal Revenue Code is very strict and no extensions are allowed. It is best to carefully think about your replacement property alternatives before you chose to sell your property.

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Norway certainly is an interesting country in that taxes are so high it tends to balance out everything. You see if you start making too much money, why produce anymore than you need, you just pay most of it in taxes anyway. Norway has a huge Middle Class, like 98 plus percent or more we are told. The taxes are outrageous and it seems to be social engineering thru taxation, but does that really make sense?

For instance if people do not wish to work more than they need because they will simply be paying more in taxes then why work any more than one has too? If everyone has the same amount of everything then eventually everyone considers themselves equal because they are. Well economically speaking that is. Yet one has to ask isn’t that really moving people more towards socialism, as in if the government taxes are so high then the government uses these taxes to provide more and in doing so, again alleviates the need to work hard to produce much more because the government will give it too you.

Some may really like this idea, great move to Norway, if they will take you, because as great a country as it is and it is a very nice place with really nice people. I must say that I chose the Capitalism over that any day and I will be staying right here in the USA. Thank you very much and good day.

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There is a major difference between a tax preparer and a tax advisor. Tax preparers, although many may advertise that they can save you money with your taxes or get you a better return, their actual job is really focused on the actual paperwork of filing out your taxes. A tax advisor is actually what you should look for if you are hoping to save money on your income tax.

Here are some tips you can use to choose a good Tax Advisor:

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