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"Good Morning Newsletter" Realty Growth Inc
 

Happy fall everyone!

As we begin the fourth quarter of 2021, we start thinking about the end of the year and planning for the new year. With that comes thinking about year end and any tax planning that needs to be done. Around this time can really begin to become stressful, however, remember there are always people that are here to help. Your greatest ally is your financial team, which oftentimes will consist of your accountant, financial advisor, and possibly, real estate advisor. 

 

So you might be asking yourself, what does real estate and taxes have to do with one another? Well, the answer is quite a bit! Believe it or not, there are a few different routes a real estate investor can take to help with taxes. Two specific strategies are through accelerated depreciation and what is known as a 1031 tax deferred exchange. 

 

Accelerated depreciation is any depreciation method used for accounting or income tax purposes that allow for higher deductions in the earlier years. This in turn could help offset gains on a property. This can be accomplished through what is known as a cost segregation study. 

 

A 1031 exchange gets its name from Section 1031 of the U.S. Internal Revenue Code, which allows you to defer paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value

 

With either of these be sure to consult with your accountant and attorney to be sure that this is the right thing for you!

 

We continue to see a strong market in Rochester, despite fairly low cap rates when compared to the past. In October, our office closed ten property closings, including a Family Dollar Store in Stewartville, Minnesota, as well as the former Associated Bank branch building by the Apache Mall. We also were able to execute six new sales contracts in the month. The general market also saw steady sales and leasing during the month of September. All in all, another very strong month! 

 

In closing, I hope that you all are enjoying the changes that the fall brings, as well as gearing up for what will be an amazing holiday season! Stay warm, start your tax planning, and begin thinking about how you want to build your real estate portfolio in 2022. Please remember, we are always here to help! Thank you again for your business, your support, and all that you do. 

 

Sincerely, 

 

Nick Pompeian, Partner and Broker Realty Growth Incorporated