The Secrets of IRS 1031

The 1031 tax-deferred exchanges that occur for fractional ownership interests, or tenancy in common interests, have a complicated name, but are in fact much simpler than you may think. Earlier this year, the 1031 Revenues Procedures addressed the topic of tenancy in common interest as replacement property in 1031 tax deferred exchanges.

There are many advantages to using tenancy in common interests in order to complete a 1031 exchanges. You can make the interests easier to find suitable replacement property within a 45 day period, allow investors with limited amounts of money to spend to diversify their properties, and to give someone a chance to own a share of property that might otherwise have been too expensive for a single person.

Under the 1031 section, an investor in real estate gain defer gain on a sale by exchanging the gain for a similar property and also meet the specific number of requirements that go along with this exchange. To receive your tax deferral from this exchange, you will need to find a replacement property that is equal or greater to the net sale price of the property that is being sold. All of the proceeds from the sale must be used in the exchange.

If you are participating in one of these exchanges, you must also be able to find replacement property that is suitable within 45 days of the property sale. The title to the property must be taken by the investor in the same manner that he or she gives the title in the sale of the property. The reason for the title requirement is to prevent investors from buying into more attractive or larger properties when they have to buy additional shares or other interests of partnership to complete the sale.

Before this ruling on section 1031, many tax professionals were questioning the fractional interests as replacement properties because it could be seen by the IRS as the investor being interested in a partnership rather than the property. If it was seen as a partnership instead of a property exchange, the exchange would no longer be valid.

Now there are many companies within a niche community that are beginning to make use of TIC interests to have a complete 1031 exchange. All the investors want is a deed for a percentage interest in the property rather than a share of partnership in the owning of the property.

The minimum standards that need to be met for a TIC interest to qualify as a replacement property in the exchange are: the number of tenants in common must be under 35, the sponsor cannot own the property for more than six months before all of the interests are sold, any decision that will have economic impact on the property must be voted on and approved by all owners, the management agreements must be renewable, and the management agreements must also provide for market rate compensation.

1031 exchanges are still a new type of property investment, but as the trend catches on there will be more and more opportunity to invest in this type of venture.

10 Best Charity Car Donation Tax Deduction Tips

These are some of the most important and best charity car donation tips you'll need to consider before donating your car, truck, van or other any other vehicle. You can donate cars, trucks, boats, airplanes, ATV's, even old motor homes and many other types of vehicles and get a good tax deduction.

1. First it's important to know that the laws were changed in 2004 limiting the donor's used car donation tax deduction to the amount the selected charity ends up selling the car for.

2. You want to find out if the charity is rightly eligible to be the receiver of tax deductible contributions so make sure that you ask for the organization's Internal Revenue Service's "Letter of Determination." This will verify their status.

3. Make sure to get a good well-documented receipt from the charitable organization for your vehicle or car donation.

4. In order not to send up any red flags on your income tax return know that the IRS looks carefully at non-cash donations so make sure to clearly document the correct car or vehicle value and keep accurate detailed records.

5. If your used vehicle is worth $500 or even more, then complete the newest Internal Revenue Service tax deduction form, the number may change form time to time, fill out the proper portion and attach it to your income tax return. You must also include a written acknowledgement from the charity.

If your charitable organization sells your donated car, then they must provide you with the sales price within 30 days with a certification the automobile, truck, van or other vehicle was sold at between parties not related to each other. The donor's tax deductions must be limited to the total the charity sold the car or vehicle for. If they don't sell the car, they must provide you, the donor, with a receipt within approximately thirty days of the sale, whenever that occurs. They must also certify to the donor how it intends to use or upgrade/repair the car and state in writing that they will not sell the vehicle or transfer it to any other party.

6. If your car is valued at $5,000 or more you'll need to get an independent appraisal and complete the appropriate part of the Internal Revenue Service form.

7. For cars or vehicles that are worth under $5,000, use either Kelley Blue Book or a guide from NADA to determine the current market value. Use the right and correct figure for the date, mileage, and car's condition. Don't just pick the highest figure for your vehicle year and model and not note other important factors. The IRS will look down on this.

8. Take several close-up pictures of the vehicle inside and out.

9. Save all your receipts for any upgrades including any new tires to document and verify the car or vehicle's value.

10. It's important to know that it's not the charity or charitable organization, who is obligated to come up with the correct value and you'll have to pay any penalties if the IRS audits or challenges you and finds your figures are unfounded.

Finally be aware that some charities use a donated car or vehicle for transportation or for hauling and they benefit directly from the donation. But in most cases the vehicles or cars are sold by the charity, dealer or car donation center to help raise funds for the charitable organization. When this happens, if it's the dealer, the charity may get only a flat fee and may be as little as $50 for your used car. So check with the charity on how they intend to handle the donation if this is important to you.

These are some of the best charity car donation tips you can put to use immediately if you're considering donating a car, truck or other vehicle to a charitable car donation program.

What Does Term Return of Premium Have to Offer You?

With so many different kinds of life insurance policies to choose from, it can be difficult deciphering one from another. One of your many options to choose from includes term return of premium. There are several appealing features that makes this a legitimate option for you to consider.

Although being a fairly new option to consider, it has already gained popularity. Unlike many other policies, term return of premium provides both death benefit protection and a return of premium insurance feature. The whole concept is that it is aimed at the same thing that term insurance is. The concept is that you are probably not going to die, so it is just a waste of your money to pay for the rest of your life.

So exactly how does this kind of life insurance work? If you keep your policy for the term period, the life insurance company that issued the insurance will return the entire premium that you paid for the insurance at the end of the period. It does not matter how long of a period it is for, you will still get the entire premium back.

In addition to this, you can still get some premium return back if you do decide to cancel your policy before it is up. Obviously, the longer you keep your policy the higher the amount of return will be. You can rest assured that you are not wasting your money when you buy insurance that has a return of premium option.

You can look at it as a reward in a sense. By keeping your policy term return of premium life insurance, you are rewarded by getting a guaranteed return of your total cumulative premium paid on the policy during the level term period.

Another benefit is that life insurance return of premium is considered income tax free. The reason for this is because you are not receiving any more money back than what you put into the return of premium life policy. This way you can get all of your money back without the worry of having to give some away to the government.

There is no question that it can be difficult deciphering one life insurance option from the other. However, it is essential you take into consideration this new option. The term return of premium has a lot to offer someone who wants to be insured without wasting their money away.

Return of Premium Term Life Insurance

Many people who shop for life insurance prefer the rates of term life as opposed to whole life. However some view the money as a waste if they are young and expect to outlive the coverage. Return of premium life insurance or ROP life insurance allows them an alternative, a return of all their premiums if they outlive the coverage.

Return of Premium Term Life Insurance is a concept where if you outlive your term life policy the insurance carrier returns all of your premiums paid in. Traditional term life is the most cost effective way to purchase life insurance. Cash Value insurance, on the other hand, means paying higher premiums as the contract pays at death. Return of Premium or ROP somewhat splits the two in the middle.

ROP typically costs 25-50% more than a traditional term life insurance policy. The key is to have your agent evaluate the rate of return on the extra premium cost for the ROP policy. For example, a healthy 35 year old male can purchase one million dollars of coverage on a level premium 30 year guarantee for about $830 per year. The ROP premium for the same is $1440. So you are paying an extra $610 per year for Return of all your premiums paid in if you outlive the term. Well, what is your rate of return re paying $610 per year for a return of $1440 x 30 years or $43200. It is 5.08% net.

In any case, this is not a bad solution if it can fit into your budget. Return of all premiums paid in are not taxable as it is a return of your principal. Consider consulting an agent that has the product savvy and software to present the facts to help you make a prudent decision. Get knowledgable quotes and comparisons from the site below.

How to Refinance Your Car and Save Money on Interest

If you're able to get a car loan with an interest rate substantially lower than your current loan, you may save money on refinancing your car. To get out of debt you must question every financial decision, consider all the options available to you, and plan a way out of debt.
You may improve your cash flow each month and save on interest by refinancing your car.
Joel has been making a lot of progress in getting his financial affairs in order in a very short period of time. During this interview he explained that decided to sign up for the One Paycheck at a Time online budgeting program, because he wanted to:
• Design a plan to get out of debt • Identify where his money is going and how much he has left • Avoid late fees and stay ahead of his bills
Joel has made some lifestyle changes in an effort to save even more money each month. One recent decision was to rent an apartment with his brother. He has committed to do this for one year while working to gain greater control of his finances. Not everyone is in a position to change their lifestyle to this extent, but it worked for Joel.
Although Joel doesn't have any credit card debt, he did, however, have a car loan that still has 3 years left to pay. A few years ago, Joel filed bankruptcy. When he went to buy a used car, a 2001 Saturn, shortly after filing bankruptcy, he was offered and accepted a 17% interest rate. Needless to say, this interest rate is very high! In fact, this interest rate is nearly double of most car loans if you have never filed bankruptcy.
Here is the breakdown of the car loan:
Number of years on the loan: 5 Purchase price of the car: $10,000 Interest rate: 17% Monthly payment: $248
By the time Joel would pay off this loan, he estimates he will have paid approximately $4,911 in interest! Since he filed his bankruptcy over two years ago but hasn't yet been discharged, he questioned if it made sense to shop for another loan. Would anybody finance him? Without owning a home, Joel couldn't take advantage of borrowing money from any equity so he would need to see if a lending institution would be forgiving of his past debts.
With roughly $7,000 left to pay on his current loan he decided to go shopping for a new loan. If he was declined, then at least he knew the answer. In addition to getting a lower interest rate for the car, Joel was also hoping for a slightly lower monthly payment without stretching out the length of the loan past three years.
There are numerous online websites now where you can apply and compare offers from different lending institutions for car, personal, and home loans without cost or obligation. This is a great advantage to the consumer since banks are vying for your business.
Joel didn't have a lot of loan officers calling him, but he did have one very reputable national bank offer the following terms:
Number of years on the loan: 3 Purchase price of the car: $7,000 Interest rate: 9% Monthly payment: $222
Once he pays off this loan, he will have paid $1,013 in interest - a savings of about $3,898 in interest! This was an easy decision. There will be some paperwork fees that go along with the loan, but overall, Joel made a smart decision in refinancing his auto loan.
Depending on the lender, consumers may qualify for a lower interest rate if they agree to electronic payments. This time saving payment method where your loan payment is automatically deducted from your checking or savings account may afford you a lower interest rate and you don't have to mail in your payment each month. You may also be able to choose your payment date. Be sure to ask about this with whatever financial institution you consider. There are no guarantees that a financial institution can find you a better loan than what you have now, but if you don't try - the answer will always be no. If you don't qualify this year, try again next year.