Real Estate Journal — May 16 - 29, 2014 — 3A
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M id A tlantic
M id A tlantic R eal E state J ournal By Pamela A. Michaels and Scott R. Saunders Capital Gain Tax Rates “Exchanges Defer The 3.8%Net Investment Income Tax And 20% Capital Gain Tax” I CAPITAL GAIN TAX RATES “EXCHANGES DEFER THE 3.8% NET INVESTMENT INCOME TAX AND 20% CAPITAL GAIN TAX” By: Pamela A. Michaels and Scott R. Saunders Investors from the Northeast and Mid-Atlantic regions are typically in a state of shock upon hearing for the first time the extent of the capital gain tax liabilities they will face upon the sale of appreciated real Federal Capital Ga in Tax Rates nvestors from the North- east and Mid-Atlantic regions are typically in a state of shock upon hear-
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Section 1411: Net Investment Income Tax*
Married Filing Jointly
Capital Gain Tax Rate
Combined Tax Rate
\
ing for the first time the extent of the capital gain tax liabili- ties they will face upon the sale of appre- ciated real estate. The familiar ad- age, “It’s not h ow mu c h you make , b u t h o w mu c h y o u keep” rings t ruer than ever for real
0%
$0 - $36,250
$0 - $72,500
0%
0%
15%
$36,250 - $200,000
$72,500 - $250,000
15%
0%
18.8%
$200,000 - $400,000
$250,000 - $450,000
15%
3.8%
Bryn Merrey Washington, D.C. (202) 536-3700 J.D. Parker Manhattan (212) 430-5100
Spencer Yablon Philadelphia (215) 531-7000 Brian Hosey New Jersey (201) 582-1000
23.8%
$400,001+
$450,001+
20%
3.8%
Pamela Michaels
• The 3.8% Net Investment Income surtax only applies to “net investment income” as defined in IRC Section 1411.
provides critically needed tax relief. Reflected below is a summary of the four ways in- vestors will generally be taxed on the sale of an investment property if they do not take advantage of Section 1031: Pamela A. Michaels is an attorney and Vice President of Asset Preservation, Inc. Ms. Michaels is located in Manhattan and can be reached at 866-317-1031 or at pmichaels@apiexchange.com. API is a nationwide Qualified Intermediary and wholly owned subsidiary of Stewart Title. Asset Preservation, Inc. h s facilitated more than 150,000 excha ges since 1991 and performs all types of exchanges. This information is not intended to replace qualified legal and/or tax advisors. Every taxpayer should review their specific transaction with their own leg l and/or tax couns l. © 2014 Asset Preservation, Inc. All rights reserved 1. Depreciation Recapture: First, taxpayers will be taxed at a rate of 25% on all depre- ciation taken during their ownership of their property, commonly known as deprecia- continued on page 16A As noted above, State and local tax rates must be added to the above rates to determine an investor’s total tax liability. As always, taxpayers should consult with a competent tax advisor to review their specific circumstances.
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Scott Saunders
estate investors facing today’s high tax rates. Fortunately, IRC Section 1031, a provision in the tax code since 1921, Retail vacancy dips below 7 %... continued from page 2A to rise over the past two years from the downturn that hit retailers in 2008 and 2009. However, we still continue to see space become vacant due to closings throughout the state Leasing activity continues to be driven by retailers opening shops in the 1,000 to 5,000 s/ frange. However, we have seen a substantial increase in big box retailers taking advantage of favorable market conditions and rental rates. New Jersey’s long list of restaurant choices and eat- ing establishments continued to grow as new restaurant concepts and established ones have opened or announced planned openings. Health and Wellness in- dustry retailers continue to flourish in the Garden State. Including , medical tenants who continue to open facilities in traditional retail spaces and shopping centers more and more. “Consumer confidence con- tinues to rise with our improv- ing economy as results have shown a continuing decrease in New Jersey’s retail vacancy rate.” said Lanyard. “These numbers confirm that the re- tail climate is improving. We will still have some retailers who will conservatively wait for a more sustained improve- ment, but, all in all, 2014 looks to be another good year for retail space being leased, and as a result, desirable retail locations will soon be at a pre- mium.” n
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Pamela Michaels, Esq. Vice President / Division Manager Manhattan: 866.317.1031 | Long Island: 866.394.1031 pmichaels@apiexchange.com | apiexchange.com Call for a complimentary consultation.
A National IRC §1031 “Qualified Intermediary”
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