Opportunity Zones • CA Prop 19 • Unclaimed Property Search
Monthly AIRE Perspectives – September 2021
Dear Friends and Valued Clients,
We apologize for missing last month’s edition of The MAP. Although fully vaccinated, I was struck with COVID and was out of the office for a while, but we are now back to normal and all of us are in the office.
CLIENT PORTAL IS HERE! VERY IMPORTANT – PLEASE READ!
This Wednesday, September 8th, please look for an important email from us, which will provide you with your login credentials for our client portal, where you will be able to view your AIRE statements, which will include performance information, allocation, analytics and more! IT IS IMPORTANT THAT YOU USE THOSE CREDENTIALS AND LOG IN WITHIN 48 HOURS, as the credentials are only valid for a limited time, due to security reasons.
A worthwhile search: Unclaimed Property
This is a worthwhile search you should run every few years, and it only takes a minute or two. Every state has a database of unclaimed property. You can go to your state’s database, enter your name, and generally have a more than 50% chance that you will find property of yours that has not been claimed. Most of the time, these are old refunds or credits from prior accounts, such as cell phone accounts. Other times, however, it could be something more substantial. So please take a moment to run a search of your name in your state’s database and see if you can claim some long-forgotten funds that belong to you!
You can click here for California’s Unclaimed Property site. For other states please do a Google search and type in “<Your state> Unclaimed Property” to find your unclaimed property site. This is free money that is already yours, so please make sure to take a moment to capture it!
More on Opportunity Zones
Although we had covered this in a previous month’s newsletter, this is an opportunity that essentially only exists through the end of this year, so we want to remind you again about Opportunity Zone funds, which can be a potential solution for almost any type of appreciated asset. Please note that this is not a recommendation, as our advice is always custom-driven to each client. However, for those who have taken capital gains in the last 180 days, this is something we want to make sure you are aware of.
With Opportunity Zone funds, investors who take gains on assets can invest those gains (within 180 days) into managed Opportunity Zone funds and receive a number of tax benefits. First, the gains taken are not taxed until the end of 2026 or when the purchased asset (the Opportunity Zone investment) is sold. Second, for gains placed in such funds for at least 5 years, the cost basis of the original investment is increased by 10%. In other words, the investor not only defers the capital gains taken on the prior investment, but also gets a reduction in the tax if held for 5 years. Third, if the Opportunity Zone fund is held for at least 10 years, the gains realized on the Opportunity Zone fund itself are fully tax-free.
Important for California Homeowners!
If you are a homeowner in California, you should be aware of Proposition 19, which expands upon an important tax benefit for principal residences. Essentially, homeowners who are over 55 years old (or severely disabled) can move the tax basis of their existing residence to a newly-purchased main residence, as long as the purchase of the new residence has been made within 2 years of the sale of the prior residence, and as long as both properties are in California.
For example, assume that someone purchased a home as their main residence 10 years ago for $1 million, and sells that home for $2.5 million today. If they purchase a new main residence within 2 years for $2.5 million, the new home keeps the same property tax basis as the original home, instead of a stepped-up $2.5 million basis! This can potentially save many thousands of dollars a year in property taxes for those who change their primary homes after age 55.
This has extremely important ramifications for those who are approaching 55, as it is generally better to wait until after 55 to change homes, if possible! Our expertise is not in tax law and we urge you to check with your tax advisor, but this law is one that is important enough for us to at least share. For additional details and information, please click here.
For those of you outside of California, please inquire with your tax advisor about any similar situations that may exist in your state.
Once again, we would like to thank you for your trust and loyalty, and look forward to speaking with you in the upcoming month.
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