There are many reasons that an owner may conclude that the time is right to divest ownership of a property. It may be management problems, an opportunity to buy a more desirable property or any other scenario. But what ever the reason, the one stumbling block to taking action is the requirement of paying Capital Gains taxes. "Necessity being the mother of invention " has brought into existence many clever and innovative strategies to delay or avoid the payment of these taxes. These are often referred to as Exit Strategies.The circumstances and preferences of the property owner wishing to divest ownership of presently help property will determine the correct strategy to use.
- Triple Net Lease the existing property to a qualified person, or entity, who will operate the present property and send you a check each month.
- Lease with an option to sell when a desirable new property has been located and put under contract.
- Exchange your present property for an interest in an existing portfolio of real estate properties professionally managed by a real estate trust.
- Create a Charitable Remainder Trust and contract for "guaranteed" life income.
- Begin the process of gifting to family members.
- Transfer to a Community Foundation and contract for what ever arrangement suits your income requirements as well as your estate planning objectives.
- Take advantage of a simple simultaneous exchange into a more desirable property.
- Use the "Starker" delayed exchange in order to find the desirable property.
- If you have already found the desirable property, arrange for a "Reverse Starker" exchange.
Each one of these strategies has its advantages and disadvantages. But they all accomplish the same objective of avoiding taxes.
Every exchange is different, there are no two exactly alike. Every client who comes to us has objectives and requirements that are unique. There is not any one simple answer for every circumstance. "One size fits all" is not a possibility for a property owner today. For a confidential and comprehensive analysis of your own unique circumstances click here.