| While the 1031 deferred exchange is a viable | | | | in what you choose |
| means for some real estate owners and | | | | |
| investors, many are finding the stringent | | | | One challenge that real estate investors face |
| requirements and the lack of quality | | | | with the 1031 deferred exchange is "like |
| properties a barrier to successful completion | | | | kind" clause. A 1031 exchange cannot be used |
| of a 1031 exchange. With long term tax | | | | for real estate outside of the United States. |
| deferral as a primary objective, many real | | | | However, many real estate investors are |
| estate investors are looking for other | | | | setting their sites on retirement homes in |
| options to help them eliminate current | | | | other countries so a 1031 is not a viable |
| capital gains taxes. | | | | transaction for them to help with tax |
| | | | deferral. |
| Though less than 10% of investors are aware | | | | |
| of it, the Private Annuity Trust is quickly | | | | Also, primary residences are not covered by |
| making its way into the mainstream as a way | | | | 1031 exchanges, and many homeowners now have |
| for investors to not only avoid current | | | | significant gain that will be taxable when |
| capital gains taxes, but also a secure way to | | | | they sell their home. With a Private Annuity |
| protect assets and create a lifetime income. | | | | Trust, you have an opportunity to keep all |
| | | | the proceeds from your sale and create a |
| Affording time to make solid investment | | | | balanced investment portfolio that will fund |
| choices | | | | your lifetime income stream. You have the |
| | | | flexibility to begin taking payments |
| Investors don't want to hand over 30% of | | | | immediately or to defer payments until you |
| their profits to the government when they | | | | need the income. |
| sell their property. Eager to defer | | | | |
| taxation, many investors jump into deals | | | | When are the capital gains property taxes |
| before they're ready or initiate transactions | | | | due? |
| that don't provide them with any additional | | | | |
| financial benefit simply to avoid capital | | | | With a Private Annuity Trust, capital gains |
| gains tax. With a 1031 deferred exchange, | | | | taxes aren't due until the money is |
| the property must be identified within 45 | | | | distributed to the seller. Because the Trust |
| days and purchased within 180 days following | | | | agrees to make lifetime payments, capital |
| the sale of the original property. | | | | gains tax is paid incrementally over the |
| | | | seller's lifetime as well. For example, if a |
| The Private Annuity Trust puts the power of | | | | real estate investor sells a property through |
| choice back in the real estate investor's | | | | a Private Annuity Trust, the entire profit |
| hands, providing the flexibility to invest in | | | | from the sale, including what he would have |
| good deals when they arise. With a Private | | | | had to pay for capital gains tax, remains in |
| Annuity Trust, capital gains tax isn't owed | | | | the Trust. |
| until the money is distributed as lifetime | | | | |
| income from the Trust. That means that while | | | | As long as there are no annuity payments made |
| you're looking for a profitable real estate | | | | to the seller, there is no capital gains tax |
| development opportunity, the money you would | | | | payment due. The proceeds from the sale and |
| have paid to Uncle Sam is earning interest in | | | | the amount owed for capital gains property |
| the Private Annuity Trust. | | | | tax can remain in the Trust collecting |
| | | | interest until the Trust payments begin. |
| Like kind? Affording the freedom to invest | | | | |