REAL ESTATE NEWS (Los Angeles, CA) — Section 1031 of the U.S. Internal Revenue Code 26 U.S.C. § 1031 allows for the exchange of certain types of property, allowing the investor to defer the recognition of capital gains or losses due upon sale, and to defer the capital gains taxes.
The 1031 exchange (also called a like-kind exchange or a Starker) is a swap of one business or investment asset for another. Although most swaps are taxable as sales, with a 1031, there will be no tax or limited tax due at the time of the exchange. This allows the form of the investment to be changed without (as the IRS sees it) cashing out or recognizing a capital gain. That allows the investment to continue to grow tax deferred. The new property must be found within 45 days of old property escrow close. The new property escrow must close within 180 days after the sale of the old property.
President Biden has proposed limits to 1031 exchanges, which would have consequences for investors, and for the economy. If the proposal is approved, the most savvy of wealthy investors would likely respond by holding on to property, with the expectation that the tax code will change again in the future.
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INVESTMENT NEWS — Get way, way ahead of the pack in this wacky time, increasing wealth by triangulating the trifecta of financial assets. For a fleeting moment, U.S. Dollars are king of the fiat crop when it comes to spending money, but not for long. While most other currencies are even worse, we’re approaching the end of USD hegemony in world financial affairs, as the dollar falls precipitously in value. Inflation and stagnation, here to stay for some time, must be dealt with and taken advantage of using new methods before the great currency crisis, the coming collapse of the dollar. Bitcoin is up nearly 9 million percent in just over 12 years, up nearly 10% in the last 24 hours. Gold continues to earn its salt, still proving today to be the great insurance, the supreme hedge against all that ails the greenback. Of the top wealth creators, only one is considered to be one of the basic necessities of survival — that is real estate. In a year of volatility and ambiguity, these three wealth creators shine through the clouds to provide the power, the proof and the pudding.
STOCK MARKET CRASH
First of all, we must address the stock market, one of the most popular asset classes for more than 100 years now. Why does the LA Loft Blog often discuss gold, bitcoin and other assets, but not stocks? The reason why we have not been so keen on stocks is because of the high risk-to-reward ratio, along with low utility value, compared to other assets. In a given day, stocks have hardly more than a 50% chance of making a profit. For those holding stocks for 20 years, they have close to a 100% chance of making a profit, but after rising inflation and taxes, the profit is not that great. On top of that, you cannot eat, wear or live in a stock. That’s why, when the LA Loft Blog talks about profit from stocks, we usually discuss how best to short the bad stocks in order to make a killing. As far as today’s crashy stock market goes, we won’t say “we told you so,” but we did mention and warn about it. We’ve heard some “experts” erroneously call stocks the best investment of all time. They must be listening to financial news from around 1999. There’s a new sheriff in town, and he lives on the blockchain.
THE NEW MONEY THAT REPLACES THE DOLLAR
In the last 12 years, Bitcoin has increased in value by more than 8.9 million percent. By that measures Bitcoin is by far the best investment in history. Exactly as the Loft Blog projected years ago, Bitcoin is today the king of all investments. On top of that, Bitcoin has never lost money over a three year period. Add Bitcoin’s amazing utility: In addition to being the internet money, blockchain technology for trustless transactions, authentication, verification, authorization, payment processing, digital currency, international trade, transaction privacy, small business empowerment, automation, transparency, store of value, Bitcoin has heralded a new, exponential record-breaking era of Return On Investment. Add spin-off blockchain technologies like Ethereum for breakthrough smart contracts, the future of business, taking the online marketplace by storm. Best of all, these blockchain assets protect from consumer price inflation and dollar devaluation.
PROTECTED BY GLIMMERING RELIABILITY
Gold speaks for itself, repeating and banging everyone over the head for thousands of years: “Own me, I’m beautiful and precious,” gold sings out like a Lorelei — so don’t get distracted by it’s glimmer, but do own it for less-emotional reasons. Gold is right. Considered by many to be the ultimate in sound money, gold has protected financial well-being for thousands of years. It’s hard to go wrong with gold as long as it its securely stored physical gold or kept in a place that does not ban or confiscate gold. Some places have already respected and protected the privacy of gold, including Switzerland. The United States, on the other hand, has largely set a sad course of increased wealth confiscation for some time, part of the reason why the US is now mired in stagflation. Gold protects against stock market crashes, real estate crashes, volatility, inflation and dollar devaluation.
HOME SWEET INVESTMENT
Like gold, real estate has been around for thousands of years — much longer if you include cabins, huts, caves and farmland. Real estate is the extremely popular, highly-recommended asset class that is also one of the basic necessities of survival, giving real estate, not only one of the best sure shots of return on investment, but also must-have utility that is 2nd to none. More urgently, real estate is one of the best hedges against runaway inflation, hidden depression and stagflation that scars the investment landscape of the 2020s. The investment that you live in, real estate is the gift that keeps on giving, often surpassing stocks in ROI, and standing out as the biggest and best investment that the average family makes in a lifetime.
When we add up the utility, ROI and safety provided by these three key assets, its easy to see and feel the security, wisdom, wealth and health afforded by the three diverse royals of investment: Real estate, gold and Bitcoin
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