Finance Tax Time

OVERVIEW

Section 1031 in allows you to exchange “like-kind” investment properties without triggering the payment of capital gains tax. As your property assets appreciate in value you have the ability to upgrade into larger properties with greater cash flow. Section 1031 also gives you the flexibility to exchange your rental properties that have appreciated in value in hot markets, and re-invest into lesser-known areas that are expected to develop and become the next hot market in years to come. You can continuously defer these capital gains taxes as you continue to pyramid your property investment portfolio into larger and larger properties as long as you meet the 1031 Exchange Requirements.

1031 EXCHANGE BENEFITS

There are a lot of benefits to considering the use of a 1031 exchange:

TAX DEFERRED INVESTING

The ability to re-invest your entire property equity without tax erosion can significantly enhance the amount of capital that stays invested and can make it easier to upgrade into higher value properties with greater cash flow.

INCREASE CASH FLOW

This decision to upgrade into higher quality properties with greater cash flow can occur faster now that taxes are a lower priority transaction decision. In some markets the real estate values can get ahead of the available cash flow available from the property. In these situations it may make sense to lock in your gain and look to re-invest in another property where you can achieve higher cash flow returns.

TIMING THE MARKET

The ability to speculate on the next hot market area or region is a much easier decision under a 1031 exchange. Why not lock in your profits on property that has already risen dramatically in value and re-invest it in the next hot market? As long as your capital gains are deferred making these transaction decisions is easier.

COMPOUND RETURNS

If you are stepping up your portfolio through a series of exchanges over time your full capital gain can be re-invested without tax consequence, resulting in accelerated equity accumulation.

FLEXIBILITY

The ability to switch into “like-kind” properties as defined in the tax code gives you a range of investment options and flexibility. If you don’t want a lot of the headaches associated with managing property you can also consider Tenant in Common exchanges, which do qualify under Section 1031 of the tax code.

CONCLUSION

1031 tax exchanges gives real estate investors a lot more options and flexibility to make better investment decisions on their real estate holdings without the issue of tax over-riding sound judgment. If you own a rental property or are considering it you owe it to yourself to see if a 1031 exchange is right for your circumstances.

About the Author

S.A. Smith is a freelance writer, contributor, and editor of the 1031 Exchange Listings information portal and can be reached at http://www.1031exchangelistings.com/

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Unclaimed money in the United States is at an all time high, $25 Billion, and unclaimed tax refunds make up a large portion of that number. Approximately $2 Billion in unclaimed tax refunds is owed to 1,714,500 Americans who did not file for their return in 2002.

People owed refunds on their 2002 taxes had until April 17, 2006 to file for that tax year and claim their refund. If they do not file the $2 Billion will be forfeited to the government.

Unfortunately, unclaimed tax returns are common. There are a few reasons people do not file. Either they don’t owe taxes, they didn’t have to file because they earned too little, or they didn’t take their earned income tax credit. Earn income tax credits for 2002 are for workers who made less than $11,060 and have no children, earned less than $29,201 and had one child, or earned no more than $33,178 and had two or more kids.

Considering the people who are eligible for the refunds are those who did not make much, they are probably most in need of this money. Most likely they are unaware the money is due to them or they simply don’t know how to claim it.

The deadline to claim tax refunds for 2003 is April 15, 2007. People are owed billions from 2003 as well.

You can see if you are owed money if you did not file in 2003 by completing a form.

CLAIMING YOUR REFUND

The IRS will send a refund check after receiving the appropriate filing form, Form 1040 (or 1040A or 1040EZ). This form will indicate how large the refund check should be.

You can download this form at http://www.irs.gov/pub/irs-prior/f1040–2003.pdf or call toll-free (800) 829-3676 to request the form.

If you are owed money from 2003, remember you only have until April 15, 2007 to file or the money will become Uncle Sam’s permanently.

If you are owed an unclaimed tax refund you may be owed other unclaimed funds. There are millions of Americans who have lost money they may be completely unaware exists.

This unclaimed money is considered “unclaimed property” and includes the following:

Tags: IRS refund, lost money, money, Tax refund, taxes, unclaimed money, unclaimed property. missing fundsIRS refund, lost money, money, Tax refund, taxes, unclaimed money, unclaimed property. missing funds

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The first step in your income tax preparation is to work out your total income. A person’s total income includes many kinds of receipts such as wages, interest, alimony, lottery winnings and many more. It is important to gather all of the appropriate information for any money you have received during the appropriate tax year before you start your income tax preparation. Be extremely thorough in this aspect of your income tax preparation because the financial penalties for not including all forms of income can be severe.

The second step in your income tax preparation process is calculating the amount of deductions that you can apply to your total income. There are two basic categories of deductions to consider Itemized and standard deductions and Adjustments and exemptions. The next stage of your income tax preparation is to subtract your deductions from your total income to calculate your taxable income and look up your taxable income in the table that is supplied with the tax form. This gives you the amount of tax that you need to pay. The final stage of your income tax preparation is to subtract your tax payments, such as employer withholdings, and credits. After you have finished your income tax preparation you will know if your payments and credits exceed the tax required or not.

If you want to ensure that you pay the lowest amount of tax possible you will want to spend a lot of your income tax preparation time working out if you have more itemized deductions than the standard deduction amount. The standard deduction depends on your filing status and is adjusted each year for inflation. For most people the standard deduction is greater than the total of their itemized deduction but it is still worth calculating an itemized deduction total as part of your income tax preparation. Medical expenses, state and local taxes, mortgage interest and investment expenses are just some of the items that can be included in itemized deductions. Adjustments are deductions you’re allowed to claim and should be assessed very carefully during your income tax preparation. Every taxpayer, and their dependents, also qualifies for a personal exemption and during your income tax preparation ensure that you have included all of your qualifying dependents.

Learn more about Tax Software and gain access to a wide variety of resources at http://www.alltaxsoftware.info You’ll find articles, resources and links to helpful sites.

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