FAQ

By its very definition, tax-efficient investing refers to minimizing the taxable impact of your investment decisions. Remember, it’s not what you make; it’s what you keep. In our opinion, investing without being mindful of the tax consequences is imprudent.

When the government policy is to encourage behavior or commerce, incentives are created. There is no better incentive than to let people keep their hard earned cash by reducing their tax bill.

Proper tax planning should do two things: reduce your taxes while you are alive, as well as after you die. Permanent life insurance gives you the potential to cover these two bases at once. You can transfer your assets income tax and estate tax free to beneficiaries and also build up tax-deferred growth of cash inside the policy.

For taxpayers who own business or investment property, Section 1031 of the U.S. Internal Revenue Code allows the deferment of federal income taxes on the exchange of like-kind properties. These exchanges are also termed “Tax Deferred Exchanges,” “Like-Kind Exchanges,” and “Starker Exchanges.”

A 1031 Exchange allows the deferral of federal capital gains tax and most similar state taxes on the disposition of investment or business property, providing a taxpayer more money to invest into qualified replacement property.

A tax-deferred exchange is a transaction involving the sale and purchase of investment property or property held for productive use in a trade or business which meets requirements of Section 1031 of the Internal Revenue Code and qualifies for non-recognition of gain or loss. Technically, the exchange is tax-deferred, not tax-free, since the gain deferred in the transaction will be recognized on the ultimate sale of the replacement property received in the Exchange. During a tax-deferred exchange, the investor may not have constructive receipt of their exchange funds. Therefore, a Qualified Intermediary (QI) as an independent third party is needed to facilitate a 1031 Exchange transaction and hold the funds on behalf of the investor.