elliott - Avoid Tax With Your Property Purchase | Free Finance Articles

In late 2010, President Obama extended the tax cuts from the previous administration, which means that dividend tax levels and the capital gains taxation rate will stay at 15% thru the end of 2012. Barring another extension of Bush?s cuts, those taxes will increase in 2013.

When you do a proper 1031 exchange, you?ll qualify for nil capital gains taxes. But new investors should be aware of all the cut offs and limits imposed on 1031 exchanges in order to do them in the right way. Missing one of the two necessry cut offs, selecting replacement property poorly or making other mistakes that will jeopardise the 1031 exchange, could result in the need to pay capital gains tax on property sales.

1031 Investments and Capital Gains

In a tax change that can affect those buying and selling assets and property that amount to at least $500,000 or more, with some individuals entering into in 1031 exchanges who could be affected, the amount of assets that can be written off is going to drop dramatically in 2012, and drop like a stone in 2013.

The write-off rules that permit up to $500,000 was extended last year until the end of 2011, but the maximum quantity of assets? costs that you are going to be able to deduct off in 2012 will be $125,000. In 2013, the maximum that may be written off may just be $25,000. This is going to make a startling change in many people?s tax bills.

Depreciation Write-Offs

Obama?s extension also continued the bonus depreciation of assets thru the end of 2011. If that isn?t extended, then the amount of the asset that may be written off under this bonus will likely cut in half in 2012.

As of this moment, property that was bought after September 8, 2010, and acquired before the end of 2011, qualify for this bonus depreciation extension. The write-off can be 100% of the asset, provided it was bought in this window. Outside this window of time, depreciation offers only a 50% write-off.

It is beneficial to be conscious of tax laws and impending changes so that you can make profitable investment decisions. To get some more information on NNN Properties and 1031 investment property, visit 1031investmentopportunity.com as soon as possible.

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