Investing in Commercial Real Estate

[Spider]

Any experts out there in commercial real estate? I have 2 questions really, but first some background info: a commercial property that we own is currently going through closing, and will be completed by the end of this month, so I've been thinking about some options and possibilities.

First, is there any way for us to defer from paying taxes on the capital gain of the sale?

And second, I'm thinking of using the proceeds to either purchase another existing strip center, or even buying some land and building a new commercial property. Is this a good time to be investing in commercial real estate? I don't really want to put it in the bank or invest it in the stock market.

 

[dynamicNSX]

Check section 1031 of the federal tax code. It addresses your questions directly.

Nick

 

[Dtrigg]

Do a tax defered swap of like property for tax reasons. Invest in REITS.

 

[bling]

You have only 45 days in 1031 exchange to identify at least 3 properties after you sold the original property. Then you will have 180 days to close on the ones you identified.

I guess it would be better if you can find a potential property/properties BEFORE you decide to sale. My brother-in-law just went thru a same situation. He sold his property before he start doing research in the Houston market. After running some numbers for him, we decided to take the hit (pay the tax) instead of rushing into other investments. Keep in mind that you are deferring the tax, you still have to pay for it someday.

Hope this helps.

 

[JAM]

First, is there any way for us to defer from paying taxes on the capital gain of the sale?

Yes, You need to find a "intermediary" to make the arrangements for your sale and purchase under the 1031 code. We actually just sold some of our investment property under a forward exchange to roll all the money into our personal home we are building. After living there for two years minimum out of a five year period, we can sell it and avoid capital gains all together ... including the previously deferred taxes, so long as our profit of our new home is $500k or less when we sell. The best thing you can do for yourself is to find a good accountant, a good attorney, and a good tax exchange company (I can recommend one to you VIA PM).

And second, I'm thinking of using the proceeds to either purchase another existing strip center, or even buying some land and building a new commercial property. Is this a good time to be investing in commercial real estate? I don't really want to put it in the bank or invest it in the stock market.

As long as you buy property "right" ... meaning undervalued or with a solid development plan ... it is always a good time to invest. Just do a ton or research ad planning! Again, you need to have a good team to work with to help with the pros and cons of any situation.

 

[maynard]

Rember gains are only after all selling expences and ANY $ put into the property during ownership. Or maybe take some 2nd paper and defer out the gain and collect a little interest at the same time.