A 1031 Exchange

by doko on March 26th, 2008

The capital gains deferral a 1031 exchange grants to the investor might, at first glance, appear to be a kind of gift from the government, however it is, in reality, closer to an interest-free loan. This is because the taxpayer is expected to “repay” the funds acquired by way of the deferral by accepting capital gains liability on the subsequent sale of a replacement property. Additionally, this ”interest free loan” is one that may be kept by the investor indefinitely; an investor may conduct any number of exchanges before ultimately electing to sell outright, at which point capital gains taxes must be paid.

1031 exchanges are not limited to just land and buildings, either. You can make 1031 tax exchanges on any real estate held for investment in your business or trade, and certain types of personal property as well, from cranes or backhoes to airplanes or classic cars. In fact, 1031 exchanges are especially advantageous to those who have invested in antiques or collectibles like classic cars, because of the greater capital gains liability on the sale of these items. You cannot, however, make a 1031 exchange on things like shares of stock, bonds, or interest in a Real Estate Investment Trust.

Choosing from the various 401K plans

by karlstad on March 12th, 2008

Established by the US Government, 401K plans are one of the best ways for an employed person to build up a substantial amount of money for their retirement. If you are lucky enough to also have an employee pension plan, then combining that with Social Security and one of the individual 401K plans can lead to a some very pleasant retirement years. Starting your financial planning for retirement as soon as you begin working is the smart way to build for your future. Regrettably not too many young people really do this and many end up trying to catch up later. If your employer offers a 401K, go for it now if you haven’t started yet. Don’t put it off any longer. Though there are a variety of 401K plans, some of which are applicable only in specific situations, all except the 401K Roth share one common feature. The amounts deposited into the plan are pre-tax dollars.