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