Real Estate Opportunities For Savvy Investors

If you're considering moving to a new state, city, or just investing in some real estate opportunities, Baton Rouge, Louisiana has a growing economy, jobs, many private and public schools, as well as a wealth of interesting and unique properties. There is something for everyone in this multi-cultural hub that will continue to grow and evolve throughout the years to come.

Why Baton Rouge?

Baton Rouge is Louisiana's second largest city, which means it is ripe with both commercial and residential opportunities. There are different property types available to suit both buyers and sellers. Not only does the city have plenty of economic activity, but many new high-rise condos and office buildings are currently under construction.

What is unique about Baton Rouge real estate?

Baton Rouge is a mix of historical and architectural treasures as well as more modern counterparts. If you're interested in renovating or restoring, Baton Rouge real estate offers many opportunities. Unique architecture and restored historic homes will often retain value better than newer properties. There will also always be a higher demand and niche market for highly individualistic homes.

Is now a good time to buy?

Prices are going down and sellers are ready and willing to bargain. Right now is one of the best times to buy, especially for first-time home owners who have a down payment or are preapproved for a loan. Not only will you walk out with a good deal, but you'll have a better gauge on the value of the home now that prices are no longer artificially inflated.

You'll also have plenty of options and will have to compromise very little to find what you want. Prepare yourself to negotiate and don't be afraid to turn down unfair deals as there are many premium properties available.

Is it wise to invest in commercial properties?

Yes! Although the real estate market is troubled, there are many commercial property opportunities that continue to flourish. More people are selling their homes and choosing to rent. Rental properties, including single homes, apartments, and condos will continue to rise in popularity until the market becomes more stable.

These types of property provide a steady stream of income and are a wise investment. The city also attracts many students to its universities, making it a hot market for renting out real estate. Baton Rouge also continues to grow economically, which means there will still be a demand for prime property locations in busy areas.

What are some good areas for real estate in Baton Rouge?

There are many ideal areas in Baton Rouge to either buy a home or commercial property. If you're looking to start a family, there are many neighborhoods located near the universities, junior colleges, technical institutes, as well as many private schools.

For students there are many rental opportunities in these areas as well. Investors will find that these are growing hotspots to invest in rental properties. Crime rates are relatively low throughout the city and property taxes are lower than average as well, so there are really no bad places to buy!

A Louisiana real estate agency can help you research your housing needs in Baton Rouge through a Multiple Listing Service-even if you are relocating from another city. Visit http://www.realestatelouisiana.com to find the right Realtor for your needs.

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Tax Planning Opportunities and Installment Sales

Internal Revenue Service form 6252 records installment sales. An installment sale allows for a taxpayer to recognize income over a period of time as income is actually collected. Typically, this income will be long-term capital gain (property held for more than a year) and will yield the most favorable of tax rates, 5% or 15%. In addition to postponing the collection of income, the installment note will also have interest associated with the transaction giving the seller an additional financial benefit. Is the installment sale method always the best way to go? Of course not my friends. The one thing that we who practice tax have come to learn is never say always, and never say never.

If I were to sell a capital asset (normally a piece of real estate or a business interest), I might consider the installment method of accounting for income tax purposes under the following two scenarios. Number one, if I am selling a business interest, I might have no choice but to hold paper (take back of a note) as the buyer may not be able to get adequate financing (beware of selling business interests and consult some one who knows). In the other instance, I might be fine finacially and have access to other larger blocks of funds and can afford to receive installments over time. By entering into an installment agreement, I will want to make sure that my note is properly secured in case the buyer defaults and I will want to review the possible income tax attributes.

Suppose that our favorite taxpayer has a carryover of capital losses consisting of both long-term and short-term capital losses. In addition, this taxpayer has investment interest expenses that has been carried over for years because he has not had enough investment income to make use of the deduction. Our taxpayer friend wishes to sell a piece of land that will carry a significant long-term capital gain upon its sale. Upon studying the installment sale method, he decides to hold the note on the transaction and will charge the buyer 9% annual interest. If the note is for ten years, the taxpayer will report long-term capital gain income on the principal he receives from the note payments. The earlier years will be more in the form of interest income with smaller amounts going towards principal. This interest will provide investment interest income that will be offset by any carry-over of invetsment interest expense. This interest income provides an additional return on this transaction and will be further enhanced by offsetting it against invesment interest expense carryover. On the capital gains side, the long-term capital gain will be netted against the capital loss carry-forwards, first against the long-term losses and then against the short-term losses. The idea with capital gain and loss netting is to have any remaining gain leftover be long-term capital gain because of the more favorable tax consequences. If during the installment period, the taxpayer recognizes any short-term gains (subject to the taxpayer's top marginal income tax rate as high as 35%), there will be more opportunity to shelter the short-term gains first. If our taxpayer hadn't elected to use the installment method, he would have used his capital losses to offset income that would have been taxed at 5% and 15% rates as opposed to the higher marginal income tax rates. The installment method allows for the prolonging of capital losses to be carried over and thus, offsetting gains that would be taxed at much higher rates.

As always, carefully consider your strategy and know your tax returns as it may contain carryovers that you can use to your advantage.

Ron Piner, CPA Host of "Better Business" Saturday Mornings at 10ET ON WBIS AM 1190

http://www.mwibonline.com

http://www.wbis1190.com

taxguy9@hotmail.com

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