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Archive for the Taxes category
March 26th, 2008
The 1031 Tax Exchange
Posted in Investing, Real Estate, Taxes by doko
The indefinite capital gains deferral an exchange grants to the investor might, at first, seem to be a sort of gift from the United States government, but it is, in reality, closer to an interest-free loan, because there is an expectation that the taxpayer will “repay†the extra money gained from the capital gains tax deferral by paying capital gains taxes upon the eventual sale of a replacement property. Additionally, this interest free loan is one that may be kept by the investor indefinitely; an investor may elect to conduct any number of exchanges before finally deciding 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 an exchange on any sort of real estate you are holding 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 beneficial for those who have money in collectibles or antiques like classic cars, because of the greater capital gains liability on the sale of these types of items. You cannot, however, make a 1031 tax exchange on shares of stock, bonds, or interest in an REIT.
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March 8th, 2008
2008 401k Contributions Limits
Posted in Finance, Investing, Taxes by karlstad
The 2008 401K contribution limits are mostly unchanged from 2007 - except for the increase in the section 415 limit on total contributions which is discussed below. For most individuals, a 401K plan is likely to be one of the best possible investments to make in your future. Like any kind of savings, it requires discipline and commitment.
Retirement planning is something that a huge number of us either manage to totally avoid thinking about or simply let slide, year after year. This is stupid (there is just no nice way to put it). Without forethought and planning it is getting more and more unlikely that any of us will have enough to survive on adequately after retirement. With relatively high limits, the pre-tax contributions to a 401K can make a huge difference in the quality of life you have on retirement. And the sooner you start, the further ahead you’ll be.