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Text Box: property (B) that you had been renting. By residing in property B for two years you could establish it as your principle residence. At this time you have two potential choices. First, you could still sell your current principle residence (B) under the same tax exemption eligibility. Or second,, if you change your mind and now wish to sell your old principle residence (A) you may claim the exemption on (B), after having lived in it for 2+ years..

Text Box: “The Best Deduction Ever” - Retirement Planning

Text Box: Comparing 1031 Exchanges with IRA investments

Text Box: One of the greatest delights to a home owner is the revision made in 1997 to the tax treatment of gains made from the sale of one’s principle residence. There is probably no better (or bigger) tax benefit available to private citizens in this country! If you sell your home your proceeds are protected for capital gains up to $250,000 for a single taxpayer, and up to $500,000 if filed jointly. From a strategic point of view, when planning your retirement this could be approached several ways: If you intend to move to another location for retirement you may want to time the sale your current principle residence. The proceeds from this sale have the potential to provide up to the maximum $500,000 exemption (married filing jointly) tax free as future retirement income. This could be a

Text Box: strong contributor for potentially tax free future retirement income streams. The planning, however, should begin now. You may want to use dollars from your lump sum IRA roll over instead of the tax exempt profits from the planned sale of your residence to begin the retirement real estate tactic leading to your retirement location of choice. If you do not intend to move from your present location for retirement this tactic could still be used to help you. Let us say we still use the same approach to invest in a second income property (B) in your same area or elsewhere renting it out for income. At some point you may choose to rent your former principle residence (A ) or up to three years, and, move into your second income

Text Box: An exception could be having to pay Unrelated Business Income Tax (UBIT) if there is a mortgage debt on the IRA property in the last twelve months prior to sale. 2) Are there any rules limiting the people with whom you can do business? (pg2)

Text Box: Many investors are now familiar with Internal Revenue code 1031, which allows an individual to hold property or business for the purpose of investment. In other words— exchange one property for another without paying immediate taxes on the gain. Basically, as long as the buyer is always acquirhng more expensive property., He can avoid paying capital gains tax by

Text Box: following the 1031 rules. Here is a general comparison of the 1031 exchange and the IRA investment strategy: 1) Is the tax gain deferred? The 1031 is deferred until the final property is sold. By contrast the tax gain on the traditional IRA is not taxed until you retire (or reach 591/2) and start withdrawing any money.

Text Box: Special points of interest: The Best deduction ever -$250,000 tax free capital gains Comparing the 1031 exchange with IRA investing in RE Building your retirement investment team. Picking the best location for investments Finding the right property

“Best Deduction Ever”	1-3
“1031 vs. IRA tax deferred investing”	1-2
Mortgage rate hikes forecast for 2004	2
“Choosing the right location for investment”	2-4
“Creating a Team” for RE investing	3
“Our role “in helping you!	4

Text Box: Gary's Retirement Newsletter