1031 Financial Exchange            www.1031FEC.com   1031 1033 1045 721 Exchanges                                      

                    Exchange & Asset Tax Consultants

Matching Clients with  Premium Income Investments of Agriculture, Commercial & Energy Properties for 1031 Exchange

and Direct Purchase

The

1031

Investment

Property

and

Replacement

Property

Solution

1LessTax.com

PayNoTax.info

Receive 1031FEC-PayNoTax-1LessTax news & project updates

Free Consultation & Updates subscribe here

Free Consultation appointment

What are your alternative advantage-solutions to your tax situation? Contact 1031FEC

Free Consultation with Experienced Local Will, Trust & Estate Advisors

Free Consultation Appointment

Since the 1980’s Financial Exchange – 1031FEC has assisted income property owners to efficiently transfer assets. IRS Sections 1031-1033-721-1035 and 1036 exchanges are among alternatives considered by a 1031FEC Consultant (Tax Advantaged Specialist). Perpetual tax efficient trusts, tax efficient retirement plans and ownership of premium tax efficient property can assist to minimize tax while assisting income and asset growth.  Stock issue/transfer and insurance finance can be significant.

1031FEC Property Exchange Time-Line Outline

1) Contact 1031FEC consultant to visit about potential property sale and pre-sale planning.

2) Learn 1031FEC alternatives to save owner tax and improve income and/or appreciation.

3) Owner-seller to advise tax advisor/CPA of intent to sell, and 1031FEC alternative solutions.

4) Owner promotes active marketing and selling of owner’s original property.

5) When property offer received (place notice for potential exchange in offer) owner engages 1031 Qualified Intermediary (QI) (1031FEC can assist with QI list for owner choice).

6) With 1031FEC consultant assistance owner completes 1031 QI documents.

7) Owner visits with 1031FEC consultant about property exchange goals including owner’s personal, family, financial needs and estate planning goals.

8) With 1031FEC Consultant and 1031 QI assistance owner closes the sale of original property. Funds from owner’s closing transferred to QI escrow account.

9) With 1031FEC assistance owner does examination and comparisons of prospective new property/properties (include tax advisor/CPA for tax detail consultation).

10) Owner chooses new property/properties and identify to QI within 45 days of closing.

11) With 1031FEC Consultant, 1031 QI assistance and new property seller complete exchange qualification, purchase and closing documents within 180 days of closing or first tax due date.

12) With 1031FEC Consultant, 1031 QI assistance and new property seller complete exchange property closing. QI transfers sold property funds from escrow account to new exchange property seller. Closing is completed.

13) Within 30-60 days of closing income flow is generally generated to owner.

14) Generally within 30-60 days of closing new recorded deeds received by owner.

15) 1031FEC periodically contacts owner to assure income received and to answer questions when desired.

16) 1031FEC continues to monitor income, current property values and market advantages.

Income Facts

Increase monthly income with a Triple-Net *Master Lease. 

After you purchase a premium income property with the assistance of 1031FEC, many properties have the 15 to 25-year triple-net master lease that provides you with an escalating rate of return. This escalation occurs by increasing the rent payments each year for the entire duration of the 20-year lease.  Current income rates are approximately 5 1/2% - 8% with some with lease escalation clauses to allow income of over 12%. 

Substantial, experienced real estate operators lease the entire 1031 exchange property (known as a triple-net *master lease) from the buyer and pay a monthly lease income that increases annually.

Owners have the triple-net master lessee to guarantee lease payment.  The triple-net master lessee bears risk of operations and interest rate risk on any property loans and has great incentive to increase property cash flow and, therefore, property value.

Appreciation is yours

A non-cancelable, long-term, flat rate leases means no cap on appreciation. Unlike other triple-net leases, under the triple-net *master lease, the potential appreciation of your real property benefits you and not the triple-net lessee.

The triple-net *master lease terminates at the buyers' option or upon sale of the property. Thus, the future value of the property is not limited by a long-term triple-net lease, but rather it is derived from the true market rent potential of the property.

The triple-net *master lease is backed by substantial real estate ownership and management company with years of experience, and control or involvement in $millions of real estate assets. You can join more other satisfied real estate investors that have come to a master lessee to fill their 1031 exchange and other real estate investment needs.  The Seller is backed by this master lessee with years of 1031 experience. 

Add Real Estate and its Income to an investment portfolio.  Future investment portfolios may consist of up to 1/3 qualified real estate investments to assist to maintain portfolio value by diversification.  Experienced real estate investors may be successful with more than 1/3.

One receives an excellent return on investment that increases. When a owner passes, the real estate goes to beneficiaries at the new current basis that allows a beneficiary to sell with no taxable gain.  Or, 1031FEC has another property to exchange that will defer and save tax due.

Ask us about 1031FEC tax planning to save you and your loved ones current and future expense by considering estate plan alternatives involving your real estate investment.

One receives the real estate depreciation to help relieve income tax.  1031FEC can find qualified straight line depreciable and accelerated depreciable real estate investments.

*A Master Lease is not for all clients and may not be available in all areas. You and your tax advisor or CPA invited to consult and confirm.  Contact 1031FEC for business planning assistance. 

Use Real Estate Depreciation to reduce current tax burden. Use our (PCSS) Property Cost Segregation Study to become more efficient and reduce taxation. 

What is a Cost Segregation Study?

A Cost Segregation Study (CSS) (a.k.a. Cost Segregation Analysis) is a financial and engineering-based analysis of all expenditures associated with a property. The objective of the cost segregation study is to properly separate and classify capital expenditures using the shortest life possible based upon IRS specifications and current case law. The cost segregation study uses IRS prescribed engineering based methods to quantify and value assets and place them into their proper asset category. The end result of the cost segregation study is a reclassification of assets that allows for accelerated depreciation and improved cash flow on your property.

Cost Segregation Can Reduce Taxes and Improve Cash Flow

Common Situation for CSS

The depreciable assets in a commercial property are many times categorized with a depreciable life of 27.5 years.

These assets are often partially or fully personal property or land improvements. They are depreciable over 5, 7, or 15 years.

By having such assets miscoded, you will be missing depreciation expenses, therefore overpaying Tax and reducing cash flow.

Solution - A Cost Segregation Study (a.k.a. Cost Segregation Analysis or Study)

A well designed cost segregation study conducted by trained and experienced tax and engineering professionals will provide for the proper identification and re-classification of your properties' capital assets.

The cost segregation study yields a comprehensive analysis and report that shows which assets are miscoded and the correct depreciable lives of those capital assets.

The net result is that you can start taking the new, accelerated depreciation rates in the current tax year. The Cost Segregation Study provides you with an immediate reduction in taxes and improved cash flow.

How Cost Segregation Study

1. Phase I - Opportunity Assessment (OA)
   • Complete an initial questionnaire regarding the property.
   • The Pre-assessment team will use this information to determine feasibility and benefits of a cost segregation study.
   • If you agree with the Opportunity Assessment report, then the cost segregation team will be formed.

2. Phase II - The Cost Segregation Study (CSS)
   • Construction engineers and CPAs are assigned to the CSS project.
   • The Engineers will study drawings and physically inspect the property. The CPAs will take input from the engineers and prepare an itemized list of assets that qualify for accelerated depreciation.
   • Establish depreciable life for each asset.
   • Research any current case law that may influence classification.
   • Prepare a final report.

3. Phase III - File a Change in Accounting Method
   • Final report goes to your tax advisor.
   • Submit a change in accounting method.
     - (no amending of returns)

Additional Advantages

• A Cost Segregation Study can save up to 7% or more of the costs of a building.
• You can benefit from a Cost Segregation Study after sale of property.

Example

Apartment complex is purchased for $4,000,000.Owners allocate $400,000 of purchase price to non-depreciable land, and depreciate the remaining $3,600,000 over 27.5 years as commercial real property.

 The CSS study reveals that 5% ($180,000) of building costs are allocated to 7 year property and 15% ($540,000) to 15 year property.

The study yields an additional $758,000 in depreciation over the first seven (7) years. This additional deferral yields a net decrease in taxes of $294,000 over the first seven years.

The net present value of the tax savings is $164,000(8%) reduction in building cost, for the 27.5 year period.

Ask us about 1031FEC PCSS to save your current tax expense

Confidentiality/Non-Disclosure Agreement

Pay No Tax - Properly Structured 1031 Tax Free Gain and Tax-Free Income

Home | About Us | For Advisors | 1031 Deferral | TIC |  Investments  |  Roth IRA  | My Property |  Income |  Contact Us