THINKING ABOUT SELLING THE FARM ?
If you are, then you know the following are some of the questions that are running through your mind and other farm and land owners who are giving consideration to selling their property.
We own the property free and clear. We don’t want to write a large check to the IRS for taxes on the gain. How do we avoid this?
The Sellers can do a 1031 like kind tax deferred exchange. This means that they may defer payment of taxes on their gain from sale by exchanging into a ‘like-kind’ property.
(Like-kind may be other qualifying properties that the IRS deem acceptable as ‘like-kind’)
to include apartments, retail centers, office, industrial buildings, or other investment alternatives.
I need more income than the current cash rents I am receiving in order to comfortable in retirement, how can I do that? By exchanging into some of the alternative investments, you not only may avoid and defer payment of taxes on your gain, but will be able to structure the investment income you need through these other investment opportunities.
Selling and leaving the farm to heirs, how do I accomplish that and defer gains?
Easily. You can still defer the gains into alternative investments, such as retail centers or apartment portfolios, with each of your designated heirs named as beneficiaries.
These real estate portfolio alternative investments offer the regular income distributions as well as appreciation and depreciation with shared distributions at time of sale or disposition. This is ‘no hassle’ real estate ownership, with all management headaches handled within the portfolio itself. At such time as the beneficiaries would own the property, they too, would become ‘hassle free’ owners, with all previous terms and conditions in place.
My accountant says that I not only need to find a replacement property to meet the taxable gain amount, but also the loan to value percentage that was applicable in the previous property, how can that be accomplished?
That can be accomplished by choosing the property that meets those particular parameters with both the taxable amount and the loan to value; a blended combination of one or more properties may be the alternative to accomplishing this for the 1031 to be successful. Recently we worked with an owner on a 1031 exchange to defer over $1.5 million in gain, and a 70% loan to value. This was accomplished with a blend of two alternative investment offerings (apartment complex and pharmacy portfolios) to achieve the necessary criteria to meet the IRS regulations and approval of his accountant.
Any other questions you may have, we are most willing to answer and have our experts offer their professional opinions. Just contact us, we look forward to assisting you.