OPPORTUNITY TO MOVE YOUR EQUITY FROM A HIGH PROFIT LAND TRACT TO AN APPRECIATING CASH FLOW INVESTMENT
Land values in Collin and Denton Counties Texas have skyrocketed. Prices have escalated to levels as high as $55,000/acre for parcels located near Weston, TX (North of Hwy 380/west of US 75). They are as high as 30,000/acre north of Hwy 380 and east of US 75.
Joyous Problem. Consider a couple owning a 20 acre tract of land, north of 380 and west of US 75. This parcel might sell in today’s market for $1,000,000. The couple may have purchased the tract 12 years ago and have a current tax bases of only $180,000. A sale today may mean a capital gains tax of 15% of the capital gain, and may be as much as $100,000. If sold for cash, the investor couple may put their net cash equity (after capital gains tax) of $770,000 in their local bank account. Exciting to consider, but a financial disaster. Their local friendly bank will only pay them 0.75%/annually or $5775 per year interest. That’s not much.
As an alternate, let’s consider that with the help of a professional realtor, the couple arranges to acquire twelve single family homes located in North Collin County, all priced at $300,000 each, and all requiring a 20% down payment of $60,000 per house. By structuring a 1031 Tax Deferred Exchange into the twelve homes, they can defer all capital gains tax (about $100,000) and use such funds for opportunities of choice (including a week’s vacation in Hawaii).
As far as the future is concerned, we believe these 12 single family homes will appreciate by $30,000/yr (each home) or a total appreciation of almost $1,000,000 over the coming three years. We also believe the couple can enjoy a positive cash flow significantly higher than a bank would pay.
In Collin and Denton counties we are enjoying an unprecedented seller’s market for single family homes. Homes are appreciating at between 10.0% and 12.0% per year and there seems to be no end to the value appreciation over the coming three years. This set of market circumstances promises a tremendous opportunity for owners of small or large rural tracts to convert huge market gains in their land’s value into a number of single family homes and to defer any possible capital gains tax to a future time.
Contact Joe or Glenda Neel to learn of special market opportunities to purchase or exchange into rapidly appreciating single family properties. Don’t give away a part of your hard earned real estate profits to the Federal tax collectors. They won’t even say thank you.
Want to understand better how a section 11031 tax deferred exchange works? Call or text Joe Neel at 214-773-2246.