| Over the past several years, many people have | | | | With a 1031, you must buy another "like-kind" |
| made big profits in the real estate boom-at least on | | | | investment property in order to avoid paying capital |
| paper, before calculating the capital gains tax owed. | | | | gains tax. You must name the new property you plan |
| Now that the real estate market is leveling off, and | | | | to buy in 45 days, and the new property must cost |
| even predicted to dip, many property owners are | | | | at least as much as what you sold the old property |
| beginning to realize that once taxes are paid, the | | | | for. If you choose not to reinvest, the government |
| remaining balance is far less than they anticipated. | | | | expects you to hand over the capital gains tax and |
| However, with strategic implementation of a | | | | depreciation recapture tax immediately; meaning you'll |
| powerful, tax-efficient selling resource, there is finally | | | | be hit hard right when you're ready to finally reap the |
| a way to sell real estate, including both primary | | | | fruits of your real estate investments. |
| residences and investment properties, and not pay | | | | There are plenty of heart wrenching stories about |
| exorbitant capital gains on real estate. The solution is | | | | real estate investors who banked their entire lives on |
| called a Private Annuity Trust, an investment | | | | retiring with the profits from their investments, only |
| strategy that allows you to not only defer capital | | | | to find that they would not be able to live the |
| gains taxes, but to protect your remaining assets via | | | | lifestyle they envisioned after the taxes were paid. |
| a trust, transfer wealth to beneficiaries without | | | | On the other hand, with the Private Annuity Trust, |
| taxation, and create a lifetime of income from the | | | | properties are sold through the trust and capital gains |
| value in your property. | | | | on real estate are deferred. You can use your |
| How a Private Annuity Trust Works | | | | lifetime income stream to fund your retirement, |
| When an individual sells a property, he or she is | | | | invest in another property on your own timeline, or |
| responsible for paying the capital gains tax on the | | | | use them any other way that you see fit, all while |
| sale within a number of months. However, the rules | | | | Trust assets have the opportunity to grow, are |
| are different for a Private Annuity Trust. | | | | protected from creditors and lawsuit judgements, |
| By transferring title of your property into a Private | | | | and taxes are deferred. |
| Annuity Trust, and having the Private Annuity Trust | | | | If you've spent your valuable time researching |
| sell the property to the new buyer, you receive a | | | | investments, fixing up properties, and managing the |
| contract that will pay you lifetime income and are | | | | stress of the real estate game, you certainly don't |
| thus able to defer up to 100% of your large capital | | | | want to lose almost a third of your profits to the |
| gain over your entire lifetime. | | | | federal and state government. You've most likely |
| Through the trust, the capital gains tax is deferred | | | | planned your future, your goals, and your dreams |
| until the time that payments are made to you. | | | | around the money you thought you'd have when |
| Because the Trust issues a regular stream of | | | | you sold your properties and losing a chunk of it can |
| payments over your entire lifetime, the taxes owed | | | | be depressing, to say the least. |
| are also divvied up and paid in small increments over | | | | If you've been putting off selling your assets in an |
| time. Additionally, the money in the trust is invested | | | | effort to avoid paying capital gains on property tax, |
| in a conservative, diversified portfolio until the | | | | you owe it to yourself to talk to a professional about |
| moment it is paid out. | | | | a Private Annuity Trust and see how this strategy |
| How is the Private Annuity Trust Different from a | | | | may work with your particular situation. |
| 1031 Tax-Free Real Estate Exchange? | | | | |