property transaction It states, a real property owner
related to a 1031 exchange can sell his property and then
into a Tenant in Common reinvest the proceeds to purchase
property could have a great of like-kind property and defer
impact on the financial stability the capital gain taxes. Like-kind
of a person. Any mistake or a exchange is considered as one of
wrong decision in regards to a the best-kept secrets of the
1031 exchange can put you in deep Internal Revenue Code and very
trouble, besides unexpected few CPAs, lawyers and financial
financial liabilities. advisors have proper knowledge
about this.
It is often seen that most people
interested for a 1031 exchange By doing a 1031 exchange into a
into a Tenant in Common property Tenants in Common (TIC) property,
commit certain basic mistakes you can become a part owner of a
that jeopardize the whole large commercial property managed
transaction or results in a by professionals, who pay you a
complicated legal situation monthly income for the property.
leading to the client paying a This is favorable for most people
huge tax or penalty amount. because it has got fewer strings
attached compared to private
Before I tell you about these annuity trusts, charitable trusts
common mistakes, let me first etc.
explain in brief what is 1031
exchange and how it helps. There are 3 Major mistakes that
are generally committed by people
Section 1031 of the IRC gives a going for a 1031 exchange into a
chance to real estate buyers to Tenant in Common property.
defer the capital gain taxes that
they incur by selling a property. a) Ensure that your investment
company has their act together. extensive experience with
Ask them for their history in TIC commercial property and property
offerings, check referrals for management.
satisfied clients. A good and
experienced investment company b) Choose a well-experienced
should be able to provide you qualified intermediary. A
with multiple references of qualified intermediary is
satisfied clients. Also check the extremely instrumental in the
properties available with them, a successful completion of a 1031
good investment property would exchange for Tenants in common
only pick the best properties – property. They need to be well
good real estate properties are conversant with 1031 exchange
hard to find and sells fast. rules. They ensure that all
While mediocre or small documentation and money transfer
investment companies will deal meets the guidelines set for the
with B grade or less desirable by section 1031 of the IRS.
properties, the good investment
firms will have only the best Your Accommodators will set up
properties on offer. your LLC. It is suggested that
you should not work with an
If you are planning to do it accommodator with whom you have
privately, be cautious about an existing relationship. Your
getting into a Limited family attorney or estate
Partnership where only one or two planning attorney may not qualify
members make all the decisions. as your accommodator. A small
Another alternative to could be mistake here can lead to a hefty
to get a group of friends bill for taxes or penalties by
together and do it all by the IRS, or even worse, the whole
yourself, however, that is transaction might fail due to the
feasible only if you have incompetence of your accommodator
or qualified intermediary. investment with them compared to
any startup. Let your management
c) Don’t try to cut corners on company have a small profit
your property management company. because their performance is
This is extremely important for directly related to your
profitable performance of your investment stability and is going
investment. You will have to to get you multiples of that
depend on your property amount.
management company for the
day-to-day problems that will If you are hiring an experienced
arise; they will be responsible property management firm it is
for paying your property taxes in always a win-win situation of
time and maintaining your both the parties and you are sure
building. Your property to make the best out of your
management company should be able investment.
to offer you a long term Triple
Net Lease that has detailing of Avoid these common mistakes while
your annual income percentage planning your investment for 1031
along with scheduled increase. exchange into Tenant in Common
Only reputable management properties and you can ensure a
companies would be in a position continuous flow of monthly income
to offer this. It is worth while your investment experience
spending on a good property a steady growth.
management company as you get a
much higher return on your
About the Author:
This article is written by Ray Smith, a marketing expert with years of experience in different industries and specialized knowledge on branding and Internet marketing.
http://www.1031assistance.com
Read more articles by:
Saptarshi Roy Chaudhury
Article Source: www.iSnare.com 
