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Tag: investment

BARNES New York at the NYC Real Estate Expo – October, 16th 2024

BARNES New York had the pleasure to be a platinum sponsor of the yearly NYC Real Estate Expo.

This year’s edition of the NYC Real Estate Expo took place on Wednesday, October 16th, 2024 at the New York Hilton Midtown, and BARNES New York, alongside BIM Property Management, had the honor of being a platinum sponsor with two booths where our team had the chance of meeting colleagues and professionals from the real estate industry.

BARNES President, Thibault de Saint Vincent, was invited to be a guest speaker in the main room alongside Vince Rocco, for a conversation regarding International Luxury Real Estate. He was followed by Yann Rousseau, BARNES New York Managing Partner, who participated in a panel with industry peers – Stefani Berkin from R New York, Nile Lundgren from SERHANT, Nikki Field from Sotheby’s International Realty, Alexander Zakharin from Nest seekers International, and Eric Benaim from Modern Spaces – around the topic: “NYC real estate market forecast: what to expect”.

Joachim Gruet, real estate salesperson at BARNES New York, had the honor to be the host speaker at the Bryant Room, where he introduced guest speakers and conversation topics.

The NYC Real Estate Expo is a yearly event gathering professionals in the real estate industry and the general public from across the country. This year’s edition featured 225 vendors, 150 speakers and resulted in more than 12,000 attendees.

BARNES New York team
BARNES President, Thibault de Saint Vincent in conversation with Vince Rocco.
BARNES NY and BIM booths at the NYC Real estate Expo
BARNES NY managing partner, Yann Rousseau doing a podcast with Vince Rocco
BARNES NY team
Yann Rousseau, managing partner, at a roundtable at the NYC Real Estate Expo.

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Understanding the 1031 Exchange: A Powerful Tool for Real Estate Investors

A 1031 exchange, named after Section 1031 of the U.S. Internal Revenue Code, is a strategy that allows real estate investors to defer paying capital gains taxes on an investment property when it is sold, as long as another “similar” property (for investment purposes) is purchased with the profit gained by the sale. This tax deferral can be a powerful tool for investors looking to grow their real estate portfolio without the immediate tax burden.

What is a 1031 Exchange?

In simple terms, a 1031 exchange allows an investor to sell a property, reinvest (part or all of) the proceeds in a new property, and defer the applicable capital gain taxes. The primary benefit is the ability to use the full amount of the sale proceeds to purchase a new property, thus potentially increasing the investor’s buying power.

Key Requirements for a 1031 Exchange

  1. Like-Kind Property: The properties involved in the exchange must be of “like-kind,” meaning they must be of the same nature or character, even if they differ in grade or quality. For real estate, most properties are considered like-kind to each other. Primary residences are excluded, as well as “fix-and-flip” properties.
  2. Timing Rules:
    1. Identification Period: The investor has 45 days from the date of selling the original property to identify potential replacement properties.
    1. Exchange Period: The investor must complete the purchase of the replacement property within 180 days from the sale of the original property.
  3. Qualified Intermediary: The exchange must be facilitated by a qualified intermediary who holds the funds between the sale of the original property and the purchase of the replacement property.
  4. Title Requirements: The title of the new property must be in the same name as the title of the property sold.

Benefits of a 1031 Exchange

  • Tax Deferral: The most significant benefit is the deferral of capital gains taxes, allowing more capital to be reinvested.
  • Portfolio Diversification: Investors can use 1031 exchanges to diversify their holdings by investing in different types of real estate or different geographic locations.
  • Increased Buying Power: By deferring taxes, investors can use the full amount of their sale proceeds for the purchase of new property.

Case Study: From Single-Family Rental to Commercial Property

Let’s look at a case study to understand how a 1031 exchange works in practice.

Scenario: Jane owns a single-family rental property that she purchased for $200,000 ten years ago. The property has appreciated in value and is now worth $400,000. Jane wants to sell this property and purchase a commercial property to generate higher rental income.

  • Selling the Original Property: Jane sells her single-family rental for $400,000. Normally, she would have to pay capital gains tax on the $200,000 profit (the difference between the sale price and the original purchase price; property fiscal depreciation may need to be taken into account as well).
  • Identifying Replacement Property: Within 45 days of the sale, Jane identifies a commercial property valued at $500,000 as her replacement property.
  • Using a Qualified Intermediary: Jane uses a qualified intermediary to hold the $400,000 proceeds from the sale of her single-family rental.
  • Completing the Purchase: Within 180 days, Jane uses the $400,000 held by the intermediary and an additional $100,000 of her own money to purchase the commercial property.

Outcome: Jane successfully completes a 1031 exchange. She defers paying capital gains tax on the $200,000 profit from the sale of her single-family rental and reinvests the full amount into a higher-value commercial property. This allows her to leverage the tax deferral to potentially generate greater rental income and continue growing her real estate portfolio.

Conclusion

The 1031 exchange is a valuable tool for real estate investors looking to defer taxes and maximize their investment potential. By understanding the rules and leveraging the benefits, investors like Jane can strategically grow their portfolios, diversify their investments, and increase their buying power. Always consult with a tax advisor or a qualified intermediary to ensure compliance with the specific requirements and to optimize the benefits of a 1031 exchange. 

BARNES New York has already assisted multiple clients with their 1031 endeavors, and can therefore help you with the full process and assist in pairing you with the right partners. Do not hesitate to contact us to receive further information.

Professional Executive business team brainstorming on meeting to planning investment project working and strategy of business making conversation with partner and consultation of collaboration.

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What are the advantages of buying in a new real estate development in New York? 

New York City is always bustling with people who have places to go and goals to achieve. It’s a beautiful city for real estate investment, as it perpetually attracts tenants looking to rent a home for vacation, for a semester of school, or for the long term.  

In addition, NYC is an amazing place to purchase a secondary home, as there are countless sources of entertainment and shopping, most of which are very easily accessible on foot or by public transportation. So whether you are looking for a new home for your family or an investment rental property, BARNES New York has the resources you need to navigate your way through your purchase. 

While NYC offers plenty of historical real estate, there are excellent advantages to exploring new real estate developments within the city, which often include elements of historic architecture in conjunction with the conveniences of modern, upgraded materials and amenities. BARNES New Developments has preferred access to developers. Our team consists of agents with top-notch negotiation skills as well as a thorough knowledge of different parts of the city to help you find your new home.  

How can I save money buying new real estate in New York? 

Some buyers shy away from newer developments because of the price tag; however, luxury purchases are excellent investments. Updated properties offer increased value and are often built better due to the advancement of construction and materials. They know that these details are extremely important when purchasing in the luxury market.  

For example, 35 Hudson Yards was built with hand-picked limestone all the way from Germany, giving it warm, welcoming features. 108 Leonard incorporates majestic, historical architecture and combines it with more modern features to create beautiful units and common areas. Finally, buyers will want to check out 130 William Street, as it features luxurious Italian Pietra stone kitchen countertops. The upgraded materials and intentional features add value to all of these luxury properties and will likely reduce the need for renovations in the near future. These characteristics are one of the advantages of buying in a new real estate development in New York.

Furthermore, other unique details of these new developments certainly add to their value as well. For example, 277 Fifth Avenue offers floor-to-ceiling windows and columns that were intentionally placed along the perimeter of the building to avoid blocking the view. In addition, One Wall Street features tiled mosaics and a landscaped rooftop terrace for residents to enjoy views of the NYC skyline. New York City is known for its beautiful views, and these properties deliver what buyers want to see.  

These features increase the value of luxury residences and therefore tend to increase the return on investment for those looking to rent or sell their property. BARNES New Developments provides our clients with services for buying, selling, and managing these types of properties, and our agents have the knowledge and experience to be able to identify unique features that help elevate luxury buildings in NYC. 

Will I save money on utilities by investing in a new real estate development?  

Newer developments tend to implement more affordable and eco-friendly utilities, saving the buyer money on energy costs. For example, 565 Broome SoHo incorporates a sophisticated curtain-wall system that helps to retain heat in the winter and generate solar energy in the summer. This reduces the cost of energy as well as the negative impact of consumption on the environment.  

15 Hudson Yards boasts an on-site emergency generator, in case of loss of power, that contains efficient boilers to help reduce electric costs. Electricity tends to be one of the most expensive utilities for renters and homeowners, so these eco-friendly implementations can truly make a difference in overall costs and count as one of the major advantages of buying in a new real estate development in New York.

At BARNES New York, we are always on the lookout for properties that offer efficient, low-maintenance utilities to save our clients money and reduce negative impacts on the environment. Additionally, newer developments are able to incorporate updated technologies, such as more efficient energy systems and water-efficient plumbing, to reduce these costs. 

What kinds of unique amenities are included in new developments in NYC? 

Rooftop patio in New York City with a table and chairs standing on a paved area surrounded by green turf overlooking a view of the downtown skyline and skyscrapers

BARNES International Realty recognizes that another advantage to investing in new real estate is the availability of updated, state-of-the-art amenities, which add value to the property. Some of the more popular amenities include services and spaces dedicated to the health and wellness of residents.  

For example, 53 West 53 features a gorgeous dining area that overlooks Central Park as well as a 65-foot lap pool and a golf simulator. It is conveniently located above the Museum of Modern Art and boasts amazing panoramic views. 130 William includes an infinity-edge spa pool, a yoga studio, and a fitness center with a terrace to elevate your health and fitness experience. 200 Amsterdam, located in the Upper West Side, has ‘his and hers’ steam rooms, a yoga and pilates room, and an infrared sauna. All of these amenities add up in value, especially if they are saving you money on luxuries many people typically spend money on, such as gym memberships or billiards clubs. All these savings are true advantages of buying in a new real estate development in New York.

Additionally, many new luxury real estate developments offer other lifestyle services, such as doormen, concierge, and memberships to museums or other venues of interest. The Kent, located in the trendy Upper East Side, offers doorman these services 24 hours per day. Additionally, this development boasts a complimentary one-year membership to the Lincoln Center for Performing Arts. 

7 West 57 offers a virtual concierge so that residents can conveniently schedule services, such as restaurant reservations, by phone or computer. 300 West, located in West Harlem, includes two reception areas and a lobby that is attended 24-hours a day. These types of amenities increase the value of the real estate, as they provide modern luxuries that tenants highly desire.  

Luxury New York City real estate can be overwhelming to navigate, but the opportunity to invest in these new real estate developments makes them worth the thorough consideration. Thankfully, BARNES offers agents who have extensive experience working with luxury properties.  

Our agents are informed of the materials and architectural subtleties that help add value to new properties, ensuring buyers get the best value possible. In addition, we are always on the lookout for unique amenities that will save our clients money and add convenience to their daily lives. If you are considering investing in a new property in NYC, please contact our fantastic team at BARNES New Developments. 

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