1031, Investor Status When Selling On L/O
Since this forum is where the people who deal with L/O's on a regular basis are:
It SEEMS to me (in my infinite ignorance) that selling on a L/O (depending on the wording, etc) implies certain things where the IRS is concerned. For instance, they will not make me pay taxes on the option consideration until the contract terminates one way or another, so obviously the IRS (in one sense at least) believes that the sale has not yet occurred.
It would seem a natural extrapolation, then, that a 1031 could be used as well because the property was "held" for lets say 2 yrs. Unfortunately, I seem to be getting a lot of different opinions on this. Some say just accept that you are a dealer and move accordingly, others don't see how this qualifies as "dealer" activity.
For those of you who utilize L/O as your primary exit strategy:
1 How do you handle the tax aspect?
2 What does your acct/ atty have to say about it?
3 Are you using 1031 on a regular basis?
4 Do you have something to add here that is based on your experience?
5 Have you had any dealings with the irs or tax atty, etc. that gave you a much clearer understanding of this matter?
6 Does anyone out there use L/O in part because of tax advantages? If so, anything to add here for clarification?
Just to be clear: I'm not trying to base my strategy on saving taxes... I'm trying to base it on making $. In order to understand that, however, I have to understand the advantages and disadvantages of the different selling strategies.
I would think that if one could do many profitable deals and avoid being labeled a dealer, that this would be a wonderful thing. Maybe I'm making a bigger deal of it than it is... in either case, it seems to me that the L/O has the best possibility of good profits AND tax advantages, so I wanted to get some input from the L/O pros.
Comments(0)