ENGAGEMENT
BUSINESS TIPS
EasyAnswers TIPS FROM AN ATTORNEY TO PROTECT YOURSELF — AND YOUR INVESTMENTS.
When it comes to your real estate investing business, asking questions is part of the job, especially during tax prep season. Think Realty Resident Expert, financial advisor, and attorney Clint Coons offers his advice to questions he hears from clients every day.
Q: I sold two flips in 2019 for a total gain of $145,000. I could not do a 1031 exchange because the properties were not held for investment. Help! How can I minimize my taxes on this income? I really need all of it to growmy business and my CPA is telling me I must pay over $40,000 to the IRS.
A: This is easy. Set up an opportunity zone fund and roll the $145,000 into the fund before June 28, 2020. Then, as long as you use the funds to purchase real estate in an opportunity zone before December 20, 2020, you will defer paying tax on this gain until 2026. Now, there are some other rules you must be aware of regarding improving the investment in the opportunity zone, but this should keep more money in your pocket for now.
Have a legal question that might affect your REI? Send questions to Think Realty’s editor at kwhite@thinkrealty.com.
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