You’ve invested in real estate for years. You took the late night calls, repaired the broken plumbing, handled the late night move outs, and all of the other challenges as well as rewards that come with real estate ownership. Now that you’ve decided to sell, it’s payday right? Well, while it may be, it’s also payday for the IRS. Now, don’t get me wrong, everyone should pay their fair share of taxes, but where was this partner when the late night calls came or when money was tight because someone skipped on the rent?
Many pay a good portion of their “hard earned” money to the IRS without ever knowing that there are provisions within the Internal Revenue Code (IRC) that can completely eradicate the tax bill that is generated by the selling of the real estate. Under the provisions of section 1031e of the IRC, you can sell a property and then “roll” the proceeds into another property without ever having to pay taxes on the gain. Another possibility is the usage of a Charitable Remainder Trust (CRT). Here, you establish a CRT, transfer the property into the trust, sell the property without taxation, receive an income, and receive a prorated gift deduction. With proper planning your heirs will receive a tax free distribution after you and your spouse have passed away that is equal to the original value of the assets you placed in the CRT. Also, your favorite charity/charities will receive the remaining amount of the trust. So, everyone is paid except the IRS!
You should talk with your FinBal Qualified FSP about using the strategies that will best meet your goals and objectives while adapting to your particular situations and circumstances. They can help you to establish, build and maintain a well balanced plan.
