With the outcome of the estate tax laws up in the air, it leaves tax planning a little unsettling. With the federal estate tax exemption now at $2 million per person, we don’t know if Congress will increase it, decrease it, or eliminate it. The chances are, in my opinion, that there will be some downward movement due, in part, to the consequences of a run-away national debt. (See article: "It’s What We Don’t Know that We Don’t Know that Hurts.")

Suppose Henry and Ruth Johnson have a $5 million estate. They can currently pass $4 million of it onto their children without being taxed. That leaves $1 million. With the lifetime gift tax exemption of $1 million, they are in great shape. But suppose the estate tax exemption is reduced to $1 million per person. They now have a $2 million tax liability. With the gift tax rates ranging from 41% to 45%, giving the money away may not be the answer. What should they do?

Free Cash or The Principal Residence Exclusion.

What Does that Spell? 

The Good Life.

 I recently wrote an article that predicted Congress, with their need to create money to pay off the national debt, would compromise the step up in cost basis upon the death of a property owner. Currently, when you die, your property is transferred to your kids at its true market value vs. its original cost basis. That may no longer be true and your heirs may get stuck with a hefty tax bill. So, suggesting that this may happen, what should you do?

Small Town USA: A Second Home Gold Mine

For months now, clients and visitors to our website, www.fun1031.com, have asked, “what exactly do you do?”  Well, it is time to put any questions to rest.  I will first start with my philosophy and then explain our strategy; that way you will understand the method to our madness.
 After years of promoting Oregon real estate as a good investment, I was forced to reconsider my position several years ago.  I worked off a very simple model that required a 20% down payment and a rental income that would pay the bills and generate an 8% cap rate.  That worked well when homes with three bedrooms with two baths were selling for $165,000.  Now that same house is selling for $325,000 and it doesn’t pencil unless you rely exclusively on the appreciation as your return on your investment.  My philosophy has always been, “the numbers have to make sense at the time of acquisition (not on the come) and any appreciation in value or rental income is your reward.”

 “It’s What We Don’t Know that We Don’t Know that Hurts.”

It all started when the Starker family had an innovative idea: to sell timberland in exchange for a contractual promise to acquire and transfer title to properties identified within five (5) years. That real estate transaction became known as the Starker Exchange and revolutionized the real estate industry with what is now commonly known as an IRS 1031 Tax Deferred Exchange.

It is well documented that the TIC (Tenant in Common) market has doubled each year for the past five plus years. It is estimated that it will reach a 20 plus billion dollar industry this year.

It was reported to Virtuosity by one of the top TIC providers that the average net worth of their client is around $2 million with $1,000,000 to $1,500,000 held in real estate. Their average investment in a TIC is between $200,000 and $450,000.

How do these average investments compare to the acquisition costs of fractional properties or Private Residence Clubs?

That is why FUN 1031 is committed to assisting those with equity locked up in (under-producing) investment properties and reallocate these dollars into a recreational retirement.

With the introduction of deferred payment plans on the purchase of a Private Residence Clubs, FUN 1031 can assist in converting under-performing investment properties into a reliable stream of income that can finance the deferred payment plan. With Private Residence Clubs payment plan, you can join the Club today, but defer payment of 80% of the Membership Fee for Five (5) years with competitive third-party financing from an FDIC-insured bank. Even better, when you work collectively with FUN 1031 and Exclusive Resorts we can facilitate the financing directly from the sale of your investment property at very favorable rates and tremendous tax advantages.