1031 Exchange Alternatives
Structured Sale - Establish an acceptable installment option for the sale. The buyer will assign the installment obligation to a 3rd party assignment company and deposit a lump sum equal to the fair market value of all future payments. Using the lump sum deposit, the assignee company will then purchase an annuity secured by a top-rated insurance company with payments paid directly to the seller. Taxes on the sale are only paid as each installment is received. Benefits include:
Real Estate Legacy Trust - Establish a Real Estate Legacy and gift your highly appreciated property to it. The donor will receive a current income tax deduction for the gift, and remove the property from the estate so it won't be subject to estate taxes. The property is then sold by the trust (without creating a taxable event) to pay a lifetime income stream that can equal the same income generated by the property. In addition to distributing income, the proceeds from the sale will be used to fund a Wealth Replacement Trust to replace the value of the property gifted to be left to heirs. Upon death, a portion of assets will also benefit a charity of your choice. Benefits include:
Pension Roth Real Estate Acquisition Strategy - Contributions to a Roth 401(k) are not tax deductible, but assets within grow income tax free and can be distributed tax free as well. Thus, it is a great vehicle to own highly appreciating assets like real estate. The maximum annual contribution limit to a Roth 401(k) is $15,500 with a $5,000 catch-up amount if over the age of 50. The contribution limit makes it difficult to get the proper amount of money into the plan to invest heavily in real estate. A Defined Benefit Pension Plan, when properly structured, can accept much greater contributions than the Roth 401(k), and all contributions are tax-deductible. The Pension Plan can lend money to the Roth 401(k) which it can use to purchase shares of LLCs that invest in real estate. All income and growth that is attributed to the ownership by the Roth 401(k) are not subject to tax. Benefits include:
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