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“If I sell my business, am I going to get killed with
taxes?"
“It would be better to let my kids inherit my assets at stepped up value
when I pass away.”
Sound too
familiar? Most people don’t realize estate taxes are almost 50% above
varying exemptions, and that non-spousal “step-up” values are set to cap at
$5,000,000 in the year 2012!
There is a smart, functional, and legal way to address these issues. The
answer may lay with a powerful tax tool called the Deferred Sales Trust.
If you own a
business or real estate with a large amount of gain and are not selling
your property because of capital gain taxes, or can’t find suitable,
qualified property exchanges, then you may want to consider a Deferred
Sales Trust™ (DST).
The DST can be used with any kind of entity, e.g., LLCs, S or C
election corporations, as well as individuals who own real estate, rental
properties, vacation homes, commercial properties, hotels, land, industrial
complexes, retail developments, and raw land, to name a few.
If invested properly, the money
in the trust could potentially grow at a greater rate than that of
inflation and even the distribution rate and ensures the necessary
liquidity to pay back the note due to the Seller/Taxpayer. (The interest
rate in the note to you is dictated by the IRS to be a competitive rate,
i.e., 6% to 10%.) While we have primarily focused on Capital Gains Tax, the
amount of gain due to straight line depreciation is also deferred with a
DST.
The DST Trained and Approved
Trustee may invest in REIT’s, bonds, annuities, securities or other
“prudent investments” that are suitable to help assure the Trustee’s performance
in repaying the Seller/Taxpayer pursuant to the held installment sales
note. The DST Trained and Approved Trustee’s reinvestment of the proceeds
may result in more or less risk depending on the nature of where the
proceeds are reinvested.
My husband John and I
personally used the Deferred Sales Trust to defer tax gains on an income
property we sold after 13 years of owning it. We put $400k in the trust and
have been averaging an interest rate of 8%.
If you would like to know more
please call John Young, Vice President of Sunbelt, and he will make sure
you get contact information for a trained trustee.
Joan Young
Broker
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2 comments:
thanks for this post. you are doing a great job…keep it up
Thanks so much Jayce.
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