Want to sell your real estate with no capital gains tax, no trades, no 1031 exchanges?
By Tom Omley, Tax Strategist, Omley-Keenan & Associates
Want to sell your real estate with no capital gains tax, no trades, no 1031 exchanges? What an idea! How does it work? How can I take advantage of this "tax strategy?"
There are many people who each year take advantage of this IRS-approved tax strategy and many more who would if they had known it was avaiable to them. This strategy is best suited for those who have a highly appreciated piece of Real Estate, such as raw land, apartments, waterfront homes, commercial property, or rentals (stocks and businesses may also qualify).
This is accomplished through the use of a "capital gains bypass strategy." There are some qualifications and restrictions that must be considered. The IRS does require that the property must be "free and clear" before one can take advantage of this "tax strategy." However, if there is debt against the property or properties wishing to be sold, it may be easily removed or reassigned to another property.
This strategy is best utilized when the seller wishes to have an "income stream" from the gross sale, avoiding the "capital gains tax." This gives the seller control of the cash from the sale to invest, thereby generating the increased "income stream." There are those who have, over the years, accumulated properties through the process of the "1031 Exchange." Now they would like to sell and find they can't because of the enormous capital gains tax.
The "capital gains bypass strategy" is a tax strategy enabling them to enjoy an increased income stream as well as not having the management headaches, expenses, and tax burdens associated with rental properties. There are other advantages to this strategy such as removing the asset from the Federal Estate Tax burden and at the same time "judgement proof" the assets from creditors or, in other words, "asset prevention and protection".
As one explores options to the estate planning process, it doesn't take long to see that the onerous taxes can rob from our heirs 37% to 55% of what we worked so hard to accumulate. This strategy is not available if you enter into a sales agreement prior to establishing the necessary documents.