President Obama extended Bush’s tax cuts in December of 2010, meaning that dividend taxation rates and the capital gains tax rate will stay at 15% thru the end of 2012. Barring another extension of Bush’s cuts, those taxes will increase in 2013.
When you do a correct 1031 exchange, you can qualify for nil capital gains taxes. But new financiers must be aware of all of the cut offs and limits imposed on 1031 exchanges to do them in the correct way. Missing one of the two necessry deadlines, selecting replacement property poorly or making other mistakes that will jeopardise the 1031 exchange, might result in the need to pay capital gains tax on property sales.
1031 Investments and Capital Gains
In a tax change that will affect those buying and selling assets and property that amount to at least $500,000 or more, with some individuals taking part in 1031 exchanges who may be influenced, the quantity of assets that can be written off is going to drop significantly in 2012, and plunge in 2013.
The write-off rules that permit up to $500,000 was extended last year until the end of 2011, but the maximum amount of assets’ costs that you are going to be able to write off in 2012 will be $125,000. In 2013, the maximum that can be written off will only be $25,000. This is making an alarming change in numerous people’s tax bills.
Depreciation Write-Offs
Obama’s extension also continued the bonus depreciation of assets through the end of 2011. If that isn’t extended, then the amount of the asset that can be written off under this bonus will likely cut in half in 2012.
As of this moment, property that was acquired after September 8, 2010, and bought before the end of 2011, qualify for this bonus depreciation extension. The write-off can be 100% of the asset, provided it was purchased in this window. Outside the window created by these dates, depreciation offers only a 50% write-off.
It pays to be aware of tax laws and imminent changes so you can make sensible investment choices. For more information on NNN Properties and 1031 investment property, visit 1031investmentopportunity.com immediately.
