Your ultimate Real Estate resource centre
Triple Net Properties - A Win,Win,Win Investment
Triple net properties are a great vehicle to allow property owners to
receive a residual income with their existing property rather than
simply selling it and absorbing the tax burden of a traditional sale.
The equity of an existing investment property can be used to purchase
triple net properties through a 1031 exchange service. Section 1031 of
the Internal Revenue Code states ""No gain or loss shall be recognized
on the exchange of property held for productive use in a trade or
business, or for investment purposes if such property is exchanged
solely for property of like-kind, which is to be held for other
productive use in trade or business or for investment purposes."
|
|
 |
Simply stated, if you sell your
existing property and immediately purchase a new investment
property, you will defer capital gain taxes. This will allow you
significantly more funds to purchase triple net properties than if
you were to sell your existing property through a traditional sale
and pay capital gains taxes. There are certain guidelines that must
be met, so section 1031 should be read in it's entirety before
proceeding with your transfer from your traditional property
investments to your new triple net property investments. However,
the main criteria is that you identify your new triple net
properties within 45 days of closing the sale of your existing
property and you close on your new triple net property within 180
days of the closing of your existing property. We have identified
the tax benefits of a 1031 transfer and how that can facilitate the
purchase of triple net properties. However, why should we be looking
at triple net properties in the first place? What advantage do
triple net properties give us over our existing investment
properties? We have already given one major advantage. By keeping an
investment property rather than simply "cashing in" on one, you can
save significantly on capital gain taxes. Also, by leasing a triple
net property, you will collect rent on a regular basis giving you an
annuity. With property values soaring, you could sell today and your
property could be worth significantly more a short time later. Why
leave money on the table in such a market. Rents can be increased to
adjust to property values and you still keep full equity and reap
the benefits as that equity increases in the market.
The advantage of leasing a triple net property is that you get the
annuity of your lease payment without any of the hassles or expenses
of maintaining the property. Triple net properties are those whose
lease states that the lessee, or tenant, directly pays the property
taxes, insurance, maintenance expenses and operating expenses over
and above their fixed rent. Triple net properties are usually highly
desirable commercial locations. Many retailer, restaurants, etc.
rent triple net properties. Triple net properties therefore also
retain their value very well. Triple net properties provide an
investment property without tax penalties, maintenance expenses, and
no loss of future equity. This is definitely a win, win, win
investment strategy.......
|
-
Triple Net Properties - A Win,Win,Win Investment...read
If you are interested in more Real Estate related articles Click Here
© 2006-2007 Real Estate Info. All Rights Reserved. Real Estate resource center.