The term
"property for investment purposes" refers to a property that is purchased with the intention of generating income or capital appreciation.
Full definition
Interestingly, what's missing are representation and exposure in some additional real estate apart from our main residence, which we can remedy either by buying REITs or moving some money into depressed real
estate properties for investment purposes.
1031 exchanges are based on INVESTMENT property that is bought with the intent of an renting or for business or commercial use, in other words not flipping (dealing), so in an audit situation you must be able to show that you intended to purhcase
the property for investment purposes but for some unforseen circumstance (job moved, bad spot financially you had to sell).
- If you are buying
the property for investment purposes, what is your action plan?
The critical issue is that you must have had the intent to hold
the properties for investment purposes and not have held them for sale (i.e. inventory in your business).
«Investors today rely on real estate agents and a variety of disparate sources to cobble together information on the viability of
a property for investment purposes,» says Don Ganguly, CEO of HomeUnion.
Buying / holding
property for investment purposes or buying, fixing and selling a very limited number of properties per year will not generally trigger UBIT (as long as no financing is used by the IRA to purchase the properties), but it's important to always have a knowledgeable CPA and / or attorney review your proposed investment strategy to make sure you're not inadvertently running afoul of any IRS regulations.
Loans used to purchase
a property for investment purposes, as opposed to occupancy, are not allowed by FHA under any circumstances.
The longer you hold, treat and report the property as investment property the easier it is to prove that you had the intent to hold
the property for investment purposes.