Selling a big-ticket asset like real estate or a business can sock you with the biggest tax bill of your life. The top rate on capital gains is up to 20%; the new “net investment income tax” is 3.8%, and state taxes can eat up 13.3% more. Depending on where you live, that means the government confiscates up to a third or more of your hard-earned gain!
How can you avoid that bill? Charitable trusts avoid tax on that gain, but mean giving away the principal or the income from the proceeds. Section 1031 exchanges defer tax on real estate gains, but force you to re-invest the proceeds into a “like-kind” property and impose tight deadlines for identifying and closing on a replacement. Are there any alternatives that don’t force you to give away your legacy or reinvest in an asset that you may no longer want? Do you need personal tax advice now?
Now you can take advantage of a little-known strategy to cut the effective cost of selling your asset valued at $500,000 or more to as little as 6.5%. It’s a monetized installment sale, and it uses a third-party dealer in capital assets to defer receiving sale proceeds (and the tax on those proceeds) for up to 30 years. It’s based on tax code rules dating back to 1913 and supported by a 2012 IRS memorandum.
Deferring tax is great, but you probably want the proceeds from your sale now. So, with this strategy, a third-party financial institution can lend you a non-taxable amount equal to 95% of the sale price (93.5% after loan-related costs). You can reinvest those proceeds or spend them however you like.
At the end of the installment period, the Dealer will pay you the agreed selling price that will provide you the money to repay the loan, and you’ll pay the tax with significantly discounted dollars. The strategy even offers significant estate-tax advantages!
Call me today for a free Tax Analysis to learn more about this strategy and see if it makes sense for your business or property! But only if you cann afford to pay less income taxes! Cell 610-945-1954