Real Estate Exchange Rules
How To Defer Capital Gains On real estate sales With A Private Annuity Trust
Over the past several years, many people have made big profits in the real estate boom-at least on paper, before calculating the capital gains tax owed. Now that the real estate market is leveling off, and even predicted to dip, many property owners are beginning to realize that once taxes are paid, the remaining balance is far less than they anticipated.
However, with strategic implementation of a powerful, tax-efficient selling resource, there is finally a way to sell real estate, including both primary residences and investment properties, and not pay exorbitant capital gains on real estate. The solution is called a Private Annuity Trust, an investment strategy that allows you to not only defer capital gains taxes, but to protect your remaining assets via a trust, transfer wealth to beneficiaries without taxation, and create a lifetime of income from the value in your property.
How a Private Annuity Trust Works
When an individual sells a property, he or she is responsible for paying the capital gains tax on the sale within a number of months. However, the rules are different for a Private Annuity Trust.
By transferring title of your property into a Private Annuity Trust, and having the Private Annuity Trust sell the property to the new buyer, you receive a contract that will pay you lifetime income and are thus able to defer up to 100% of your large capital gain over your entire lifetime.
Through the trust, the capital gains tax is deferred until the time that payments are made to you. Because the Trust issues a regular stream of payments over your entire lifetime, the taxes owed are also divvied up and paid in small increments over time. Additionally, the money in the trust is invested in a conservative, diversified portfolio until the moment it is paid out.
How is the Private Annuity Trust Different from a 1031 Tax-Free real estate exchange?
With a 1031, you must buy another “like-kind” investment property in order to avoid paying capital gains tax. You must name the new property you plan to buy in 45 days, and the new property must cost at least as much as what you sold the old property for. If you choose not to reinvest, the government expects you to hand over the capital gains tax and depreciation recapture tax immediately; meaning you’ll be hit hard right when you’re ready to finally reap the fruits of your real estate investments.
There are plenty of heart wrenching stories about real estate investors who banked their entire lives on retiring with the profits from their investments, only to find that they would not be able to live the lifestyle they envisioned after the taxes were paid.
On the other hand, with the Private Annuity Trust, properties are sold through the trust and capital gains on real estate are deferred. You can use your lifetime income stream to fund your retirement, invest in another property on your own timeline, or use them any other way that you see fit, all while Trust assets have the opportunity to grow, are protected from creditors and lawsuit judgements, and taxes are deferred.
If you’ve spent your valuable time researching investments, fixing up properties, and managing the stress of the real estate game, you certainly don’t want to lose almost a third of your profits to the federal and state government. You’ve most likely planned your future, your goals, and your dreams around the money you thought you’d have when you sold your properties and losing a chunk of it can be depressing, to say the least.
If you’ve been putting off selling your assets in an effort to avoid paying capital gains on property tax, you owe it to yourself to talk to a professional about a Private Annuity Trust and see how this strategy may work with your particular situation.
About the Author
Author is a writer for QA Plan who specialize in
Private
Annuity Trust strategies
. For more information you can visit
http://www.QAPlan.com
.
Are there ‘rules’ to giving gifts (in general or) for Christmas?
I met a girl in July (she is 27, I am 37) and we have been in touch by phone and email until recently (October) that we saw each other again. We have gone to dinner, theatre and gone hiking. We have met up in night clubs and we seem to have good chemistry so far. I have not kissed her yet but we exchange hugs when we see each other. She knows that I am interested in her and we are getting to know each other.
She is in real estate is and works all the time. She lists houses for her business and I want to get her a gift for Christmas.
I want to get her a GPS system for her car. Nothing too expensive, under $200. I do not want to give candy or anything like jewelry, etc. at this time. I think she would really find the GPS useful.
What I want to know is whether this is a lame gift, useless, meaningless or does it show that I think about her and her work and want to give her something useful. Or should I hold back and give something else? Any ideas either way?
You are right to be concerned about the gift you give. There are all kinds of expectations, and missteps made in that department. Considering you haven’t even kissed her, this is too expensive a gift to give your friend, no matter what your salary and hers are. Plus, it is too utilitarian, although it would be useful to her, it doesn’t convey an “I am interested in getting to know you” feeling.
Try to think of something more relationship friendly but that is not too personal. Is there anything you have done together that inspires a gift? Is there something she particularly likes that you have noticed, a certain kind of music for example. Girls are impressed if a guy has noticed what they like without being told. You might even make a small basket with a CD or a book, bottle of her favorite wine, and some tickets to an event you think she would like.
Think about what you want to say with the gift.
1031 Exchange – Second Home Rules
|
|
The Kite Runner $3.09 The timely and critically acclaimed debut novel that’s becoming a word-of-mouth phenomenon… Outline Review In his debut novel, The Kite Runner, Khaled Hosseini accomplishes what very few contem… |
|
|
The role of debt in a 1031 exchange.(INSIDERS OUTLOOK)(property exhange law): An article from: Real Estate Weekly $5.95 This digital document is an article from Real Estate Weekly, published by Thomson Gale on September 21, 2005. The length of the article is 481 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.Citation DetailsTitle: The ro… |
|
|
Crescent – did the Florida Supreme Court effectively repeal the documentary stamp tax on transfers of real estate?: An article from: Florida Bar Journal $5.95 This digital document is an article from Florida Bar Journal, published by Thomson Gale on October 1, 2005. The length of the article is 4118 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.Citation DetailsTitle: Crescen… |
|
|
Basic Real Estate Report $39.95 Basic Real Estate Report |
|
|
Comprehensive Real Estate Report $24.95 Comprehensive Real Estate Report |
|
|
Real Estate Billboard $14.99 Real Estate Billboard – Premium Poster |
|
|
Real Estate Contract $29.99 Real Estate Contract – Photographic Print |
|
|
The Real Rules $6 This book is in Used condition |
|
|
Markets, Rules and Institutions of Exchange $85 No Synopsis Available |
|
|
USSearch Real Estate – 5 Pack $11.95 USSearch Real Estate – 5 Pack |
|
|
About Real Estate $47.99 Huguette Declercq About Real Estate – Art Print |
|
|
Real Estate Agent in Office with Others $19.99 Real Estate Agent in Office with Others – Premium Poster |
|
|
Close-Up of Real Estate Sign $79.99 Ed Clark Close-Up of Real Estate Sign – Photographic Print |
|
|
Real estate Cap by CafePress $17 Real Estate Guru carries a variety of interesting real estate related products. Real estate Cap . Our adjustable, 100% brushed cotton Cap is unstructured and an ideal way to beat the heat. Wear it anytime you want to keep the sun off or cover up a bad hair day. It features a sturdy low profile brim, sweatband, and adjustable closure, as well as Pre |
|
|
Jeff Lewis’s Real Estate Rules : How to Buy, Renovate, or Sell Your Home in Any Market — the Smart Way $13.31 No Synopsis Available |
|
|
The Eight New Rules of Real Estate: Doing Business in a Consumer-Centric, Techno-Savvy World $24.81 No Synopsis Available |
|
|
Cooke’s Rules of Real Poker $7.46 This book is in New – Excellent condition |
|
|
Real Rules for Girls $11.25 This book is in New – Excellent condition |
|
|
Real Estate $41.99 No Synopsis Available |