Is there a 45 Day window on CGT tax?

[mike623317]

Someone recently told me that ...

In order to minimise Capital Gains Tax when we cash in the dinar there is a 45 day window in which if you reinvest in something like property you can achieve the lower 15% tax rate.

Does anybody know if this is true? It doesn't seem correct to me, but if anyone can shed some light on this - it would be appreciated.

Thanks

Michael

[King_NID]

Someone recently told me that ...

In order to minimise Capital Gains Tax when we cash in the dinar there is a 45 day window in which if you reinvest in something like property you can achieve the lower 15% tax rate.

Does anybody know if this is true? It doesn't seem correct to me, but if anyone can shed some light on this - it would be appreciated.

Thanks

Michael
Michael,

There is a something in the law called a tax-deferred 1031 like-kind exchange, which allows you to defer taxes from the sale of one investment to another. The IRS allows for this which helps the investor use all the gains from one investment to purchase the next rather than taking the tax hit. Investors love this "tax loophole" because they are able to use 100% of their gains to purchase the next investment rather than using a reduced amount after taxes. In other words, they can get more bang for their buck by affording bigger investments. The capital gains taxes are deferred, which means if you keep playing the game and use 1031 exchanges every time you buy and sell you could delay paying CGT for a long long time. I've even heard of wealthy families setting up their estates in a way that they defer paying CGT indefinitely from one generation to the next. Don't ask me how they do it. There are, however, stringent rules that apply when performing a 1031 exchange, such as:
-using a qualified intermediary (QI)
-new investment must be of like-kind
-investor must locate the new investment within 45 from the sale of previous investment and purchase the new within 180 days of the sale of the previous
-property must be used for productive use in trade or business or for investment, etc.

In the case of the dinar, if it revalue's high and you make a lot of money when exchanging back to dollars you would have to put your gains into purchasing another foreign currency if you wanted to use the 1031 exchange option. This is because it must be of "like-kind". It wouldn't work for example if you took you dinar gains and bought real estate. You would then be required to pay the capital gains from the sale of your dinar in that instance. I'm not an accountant and I advise you to consult with your own accountants/lawyers on these matters before acting. There is a lot of good information out there concerning 1031 exchanges, just do a google search and you'll find some of the stuff you need. Here's a good place to start:
http://www.1031.org/about1031/faq.htm

Hope that helps,

King

[mike623317]

Thank you King for taking the time and effort to reply. Thats some good information.

I'll dig around some more and post anything good i find.

Kind Regards,

Michael

[voyager]

Michael,

There is a something in the law called a tax-deferred 1031 like-kind exchange, which allows you to defer taxes from the sale of one investment to another. The IRS allows for this which helps the investor use all the gains from one investment to purchase the next rather than taking the tax hit. Investors love this "tax loophole" because they are able to use 100% of their gains to purchase the next investment rather than using a reduced amount after taxes. In other words, they can get more bang for their buck by affording bigger investments. The capital gains taxes are deferred, which means if you keep playing the game and use 1031 exchanges every time you buy and sell you could delay paying CGT for a long long time. I've even heard of wealthy families setting up their estates in a way that they defer paying CGT indefinitely from one generation to the next. Don't ask me how they do it. There are, however, stringent rules that apply when performing a 1031 exchange, such as:
-using a qualified intermediary (QI)
-new investment must be of like-kind
-investor must locate the new investment within 45 from the sale of previous investment and purchase the new within 180 days of the sale of the previous
-property must be used for productive use in trade or business or for investment, etc.

In the case of the dinar, if it revalue's high and you make a lot of money when exchanging back to dollars you would have to put your gains into purchasing another foreign currency if you wanted to use the 1031 exchange option. This is because it must be of "like-kind". It wouldn't work for example if you took you dinar gains and bought real estate. You would then be required to pay the capital gains from the sale of your dinar in that instance. I'm not an accountant and I advise you to consult with your own accountants/lawyers on these matters before acting. There is a lot of good information out there concerning 1031 exchanges, just do a google search and you'll find some of the stuff you need. Here's a good place to start:
http://www.1031.org/about1031/faq.htm

Hope that helps,

King

Sounds good to me - cash in your dinar and invest in another curreny - the dollar!!!!

[voyager]

oops - posted twice

[hunterdbk]

Thank you King...great info!!!

[Warren2173]

I wonder if another treasury investment would qualify, or would it have to be Strictly cash?.. Hmm...:rolleye03

[King_NID]

I wonder if another treasury investment would qualify, or would it have to be Strictly cash?.. Hmm...:rolleye03
I stand corrected. I called the IRS toll-free tax assistance hotline and asked the question of whether or not you could perform a 1031 tax-deferred exchange with currency held for investment purposes. The woman put me on hold for a few minutes while she researched the matter. When she came back online she told me that since "money" isn't considered "real property" it cannot be used for a 1031 tax-deferred exchange into another foreign currency. She did however state that if you made a gain when changing the foreign currency held for investment purposes back into dollars you would be subject to the capital gains tax (which we all knew in the first place).

So we pay all taxes owed after performing the exchange from dinar to dollar and use the rest to invest and/or live it up! But the info I posted previously does apply to "real property", such as multi-family properties or commercial investments. Keep that in mind when you invest your dinar proceeds in real estate and you'll explode your wealth!