investor   n: a person who purchases income-producing assets. An investor, as opposed to a speculator, usually considers safety of principal to be of primary importance. In addition, investors frequently purchase assets with the expectation of holding them for a longer period of time than speculators. Source: Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott.Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. investor  n : someone who commits capital in order to gain financial returns. Source: WordNet ® 2.0, © 2003 Princeton University

Investor's Quiz 1) What is a 1031 Tax Exchange and why should every investor know this?  Answer:  Under Internal Revenue Code 1031, no loss or gain is recognized if property held for business or investment is exchanged for other property held for business or investment.  This allows you, the investor, to essentially exchange your timber land for a shopping center, or exchange your rental house in the mountains  for a rental condo at the beach,... all without paying taxes.  How much money do you think that would save you?  2) What are the different categories and rates of depreciation as set by the IRS for investment properties and why should you care? Answer: For investment properties, the IRS allows for depreciation on Personal Property at 5 years, Land Improvements at 15 years, and the Building at 27.5 for residential and 39 years for non-residential.  Most investors understand depreciation, but don't separate the different elements of their property, therefore, they use one depreciation rate for all three aspects of their property and literally miss out on the potential tax savings. 3) Can you purchase property through the money in your retirement fund?  Answer:  While many banks and IRA managers will tell you, no, it's not true.  Maybe their companies will not allow it, but it is indeed a legal way to purchase, manage and sell real estate and a viable option for some people and some situations. What's more, while you can only contribute a set amount annually into your retirement fund, your retirement fund can earn unlimited returns on investment and those returns are tax-deferred in a traditional IRA and would be entirely tax-free in a Roth IRA!  Don't you want to learn more?   4) Before you make an offer on income producing property, what should you do? Answer:  Talk to your real estate agent and your accountant.  Get a copy of the Seller's Schedule E from their Income Tax Report and do the math. If your real estate agent can't help you with the math, find a new real estate agent - or both, even if he is your Aunt Millie's cousin's brother-in-law.  This is far too important a decision to be based on bad or incomplete information. 5) When you sell a property, do you know exactly how Capital Gains are assessed?  Answer:  Capital Gains are calculated in a two part formula: a) Original Cost + Improvements - Depreciation  = Adjusted Basis b)  Sale Price - Cost of Sale - Adjusted Basis = Capital Gains * * * * * * * * * * * * * * * Work with a REALTOR ® who understands these concepts and will work with you to find the best options for you to save the most money possible and help you build wealth for your future.

There are so many investment opportunities here in the Golden Isles ranging from single-family homes and condominiums to multi-unit buildings, land and commercial properties.  Many people come here to visit, fall in love with our community and buy "investment" property without thinking about the tax implications of their actions.  With good planning, any investment should be an asset.  It should produce maximum benefits for your investment dollar. Let's face it.  Investors invest to make money.  With that being said, the key to investing is understanding how to maximize your investment dollar by making well-thought out and informed purchase decisions, selling decisions, and most importantly, management decisions during your ownership. You can look at what qualifies as investment property from many angles.  In real estate, we tell people everyday not to throw money away on rent and to invest in their own home.  Most people consider their primary residence as their single largest investment. Primary residences, however, fall under a different category since we do not own the property for the sole purpose of investing, but also for daily use.  But what about second homes?  Vacation homes?  Many of the properties in our area are secondary residences for people out of town and out of state.  Some purchase and own these properties strictly for their own personal use.  Others purchase and own property strictly as rental property.  Many own it for mixed use, using it for a few weeks out of the year and renting out the rest. It's important to understand that how you use the property can set up your tax status when it tax season comes (See Depreciation) and especially when it comes time to sell (See 1031 Exchange). Of course, there are those who prefer to dabble in bigger game:   multi-unit rental properties and commercial non-residential properties.  Here, it's not so much as understanding usage -- that's pretty clear.  What is important here is to strictly analyze the property's viability as a good investment before the purchase, monitor income and tax benefit performances as equity builds during ownership, and knowing how to sell the property with maximum gain and minimal taxes.  Anyone with experience in commercial property should already know what I'm talking about... but the interesting thing is that this is also important for smaller investors with rental property and the same math applies!  Big or Small, every investor in any income producing property should know the basic ground rules for analyzing property BEFORE they purchase it and DURING their ownership. For more detailed information on these topics affecting Investors, please continue here: The 1031 Tax Exchange - What every Investor needs to know about this great money saving feature available through the IRS Depreciation - Are you taking the full amount allowable by the IRS on depreciation from your investment property? Your Retirement Fund - Learn how your IRA can help you build wealth for your future through real estate! Income Producing Property - Whether you own one rental property or participate in the Big Time of Commercial Property you need to ensure that you're putting your money into a sound financial investment.   I'll even help you with the math...