MLR

Category: Real Estate & Construction

Are you thinking about divesting a real estate investment and then replacing it with another property? If you sell appreciated property outright, you’ll incur a taxable gain, which lowers the amount available to spend on the replacement property.

Let’s say you own a C corporation that needs to raise some cash and you’re considering the sale of a warehouse that has been depreciated to zero.

If you have a hard time finding a buyer for investment or commercial real estate, there may be an alternative that meets your needs and saves you taxes. Instead of selling the property, consider exchanging it for a comparable property you have had your eye on.

In one U.S. Tax Court decision involving several consolidated cases, the court concluded that gains from a partnership’s land sales were high-taxed ordinary income rather lower-taxed long-term capital gains. We’ll explain the decision, but first let’s cover some background information.

Losses can be used, within certain limits, to offset other highly-taxed income, such as salary from a job. However, in general, losses from “passive” activities can only be used to offset income from other passive activities. Any excess passive loss is suspended and must be carried forward to future years.

If you’re planning to sell your business in the near future, it’s a good idea to “dress” your business for success to help attract the most potential suitors.

In many areas, the real estate sector has been hit hard. Commercial property, including apartment complexes, retail and industrial properties are down in value. This may attract investors in search of good buying opportunities.

Say you own highly appreciated land that is now ripe for development. If you cash in by subdividing the acreage, developing the parcels, and selling them off for a hefty profit, it could trigger an uncomfortably large tax bill.

The Section 179 deduction for qualified real property expenses was made permanent under the Protecting Americans from Tax Hikes (PATH) Act of 2015. However, claiming this deduction isn’t a no-brainer. Here are the pros and cons.

When a visitor to a building falls and gets hurt, often the property owner is held responsible for medical treatment and possibly more. For landlords, this extends to tenants as well as visitors. Legal responsibility for an injury stems from a concept called negligence.