PROFILE Guide: A Beginner's Guide To 1031 Exchanges

"In this world, nothing is certain except death and taxes," as the famous quote by Benjamin Franklin goes. But what if we told you that there's a way to potentially defer paying those pesky capital gains taxes on the sale of an investment or business property? Enter the 1031 exchange, also known as a like-kind exchange or a Starker exchange.

So, what exactly is a 1031 exchange and how does it work? Simply put, it's a tax-deferred exchange of investment or business property that allows you to sell a property, reinvest the proceeds in a new property, and defer paying capital gains taxes on the transaction. This means that you can potentially save a significant amount of money on your investments.

To qualify for a 1031 exchange, the properties being exchanged must be of "like-kind," meaning they must be similar in nature or character, even if they are not exactly the same. For example, a rental property could be exchanged for a commercial property, or a vacation home could be exchanged for an investment property.

There are a few important rules to keep in mind when conducting a 1031 exchange:

1. The exchange must be made for business or investment purposes, not for personal use.

2. Both the original property and the new property must be held for productive use in a trade or business or for investment.

3. The properties being exchanged must be of "like-kind," as described above.

4. The exchange must be completed within specific time limits. The investor must identify the new property within 45 days of the sale of the original property, and the exchange must be completed within 180 days of the sale of the original property.

5. The exchange must be conducted through a qualified intermediary, a third party who holds the proceeds from the sale of the original property until they are reinvested in the new property.

6. The investor must not receive any cash or other personal benefits from the exchange.

So, if you're looking to potentially save money on your investments and reduce the impact of taxes, a 1031 exchange may be worth considering. You can partner with a real estate broker to help you navigate the acquisition and disposition of assets: Just be sure to carefully review the rules and requirements and seek the advice of a qualified professional, such as a tax lawyer or CPA, before proceeding.

Florida Named Second Fastest Growing State Averaging 900 New Residents Per Day

Florida has been named the second fastest growing state according to the United States Census Bureau, trailing only Texas. Florida added 327,811 new residents between July 1, 2016 and July 1, 2017, about 900 new residents per day. The recent influx of new residents has been bolstered by northern states extreme tax and financial struggles as local and state politicians continue to tighten the tax noose on residents. Florida has no income tax, which has attracted wealthy families and individuals from states like Connecticut, New York, New Jersey, and Massachusetts, amongst others at breakneck speed. Hedge fund big wig Paul Tudor Jones of Tudor Investment Corp. moved from Greenwich, Connecticut to Florida in 2015 after Connecticut passed two of the largest tax increases in history between 2011 and 2015, taking with him over $30 million in income tax revenue. In September 2016 PROFILEmiami reported that Barry Sternlicht, CEO of Starwood Capital Group and chairman of Starwood Property Trust, also fled Connecticut to become a Florida resident. Florida now has 1.1 million more residents than New York and is growing at a pace twenty five times faster than its northern counterpart which added only 13,113 new residents last year despite local claims the state is experiencing great growth. Florida is now the third most populous state behind only California and Texas. Now, Florida once again stands poised to continue and even accelerate growth as the Tax Cuts and Jobs Act of 2017 essentially makes Florida the model on which states should tax their residents. On December 22, 2017, President Donald Trump singed into law the Tax Cuts and Jobs Act of 2017, after the bill was passed by the United States Congress. The bill caps taxpayer's ability to deduct state individual income, sales and property taxes up to a limit of $10,000 starting in 2018. The current deduction was unlimited, allowing high tax states like New York to shift tax revenue from the federal government to state and local government. While residents of these high tax states have for years cautioned local politicians from continuing to hike taxes, taxes have continued to rise and the elimination of the SALT Deduction now makes it much more expensive to live in these states. As the effects of the tax cuts begin to be seen Florida's rapid population rise should be poised to continue through 2018.