(PRWEB) February 28, 2012
Commercial real estate owners on the foreclosure track could potentially incur stiff tax liabilities in addition to the loss of their investment, stated Kevin M. Levine, Executive Vice President of Peak 1031 Exchange, Inc. (http://www.peakexchange.com), a Qualified Intermediary, unless they take into account all the outcomes of relinquishing the asset. Industrial owners could have factored in all variables when exiting a commercial endeavor, but the IRS is the crippling X factor that exponentially amplifies the loss of the asset.

Relying on current information estimating that roughly $ 360 billion in commercial debt will mature in 2012, Levine estimates that some owners will either not be able to restructure the debt sufficiently to retain the asset nor be capable to function out a answer with the lender. Simply because many of these loans are written as non-recourse loans safeguarding the borrowers personal assets in the event of a default, Levine continues, borrowers dont aspect in the impact of the computed loss on the foreclosed commercial asset being classified for capital gains purposes. Most borrowers are unprepared for this. The IRS categorizes the loan amount deficiency — that is, the remaining balance among the tax basis of the property in query and the balance of the unpaid loan — as a realized obtain for tax purposes.

Although Levine admits that at some point capital gains taxes owed should be happy, exchanging the property in a 1031 exchange is not only inventive, but allowed under the existing tax code to defer capital gains taxes. The 1031 exchange route presents a feasible alternative to distressed industrial borrowers seeking a strategic exit from the liability with an eye to mitigating future tax liabilities. In order for the exchange to a valid, nonetheless, the borrower have to sign over the title to the 1031 exchange Qualified Intermediary ahead of the house is sold at auction, and the interested purchaser must be produced conscious that title is held by the Intermediary.

The volatility of the past cycle is beginning to stabilize, revealing new opportunities for industrial genuine estate investors, says Levine, even in the arena of investors incurring a loss of equity or total loss of asset. Minimizing or deferring any possible tax liability through the 1031 exchange approach is one way of putting investors back on the road to recovery.

Peak 1031 Exchange, Inc. is one particular of the entities in the Peak Corporate Network headquartered in Woodland Hills, California. In addition to industrial loan modifications, the Peak Corporate Network entities offer you mortgage lending, loan servicing, brief sale solutions, foreclosure solutions, actual estate brokerage and escrow solutions. For a lot more details, check out http://www.peakcorp.com.

The Peak Corporate Network is a brand that represents a group of associated separate legal entities, every delivering its exclusive set of true estate services.

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