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Real Estate Guides Investor's Guide Exit Strategies with the Smallest Tax Consequences
Real Estate Guides Investor's Guide Exit Strategies with the Smallest Tax Consequences
Last Updated on Sunday, 24 February 2008 15:13 Written by Administrator Thursday, 29 November 2007 13:46
There are a number of exit strategies available for the real estate investor that doesn’t want to do the day to day management of the property anymore. The problem is simple the IRS who likes to change the rules to keep us on our toes. CHECK WITH YOUR ACCOUNTANT FOR THE BEST STATEGY FOR YOU. Your account is up to date on the changes in the tax code and what the IRS is allowing and not allowing.
There are a number of exit strategies available for the real estate investor that doesn’t want to do the day to day management of the property anymore. The problem is simple the IRS who likes to change the rules to keep us on our toes. CHECK WITH YOUR ACCOUNTANT FOR THE BEST STATEGY FOR YOU. Your account is up to date on the changes in the tax code and what the IRS is allowing and not allowing.
Most of the strategies are based on the IRS’s definition of “Like Kind”. In this definition the basis is if you are selling income producing real property you must buy income producing real property. Here are a few exchanges that have passed muster with the IRS.
Most of the strategies are based on the IRS’s definition of “Like Kind”. In this definition the basis is if you are selling income producing real property you must buy income producing real property. Here are a few exchanges that have passed muster with the IRS.
 | RIET – Real Estate Investment Trusts. |
| These are special stocks that are traded on the stock market. They are income producing stocks that have a special designation because you are technically buying a portion of the real properties help by the RIET. | |
| Real Estate Partnerships |
| You go into partnership with a group of other investors on one property. Typically, a management company manages the building for the partnership and pays out quarterly on the investment. | |
The last one is currently on hold due to an internal IRS ruling and will be in court again soon. The IRS has lost in court a number of times on this issue.
The Private Equity Trust – A trust with the property owner listed as the beneficiary is set-up. On the day the property closes the property is transferred into the Trust and the Trust sells the property to the Buyer. The profit from the transaction remains in the trust and is distributed over a number of years until there is none remaining. The seller is taxed yearly at their normal income tax rate. This is usually much better than the capital gains rate.
The Private Equity Trust – A trust with the property owner listed as the beneficiary is set-up. On the day the property closes the property is transferred into the Trust and the Trust sells the property to the Buyer. The profit from the transaction remains in the trust and is distributed over a number of years until there is none remaining. The seller is taxed yearly at their normal income tax rate. This is usually much better than the capital gains rate.
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written by paphos, January 28, 2010
its really great to see and know the smallest tax consequences...
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written by larnarca, January 28, 2010
there really are a lot of consequences for taxes..hate it..
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written by larnarca, January 28, 2010
there really are a lot of consequences for taxes..and i hate it..
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In every transaction there is usually a request for repairs given to the seller by the buyer. The work order is usually backed up by a third party inspection report. The following is a list of some possible work orders. The work orders must be completed prior to closing and the seller is responsible for having them done. Check with your local authorities for specific requirements. 
A plan is something that most people over look when going into a new home purchase and if you don’t have one it could cost you lots and lots of money. A good REALTOR® will be able to help you with your plan. The biggest issue with your plan is TIME.