If you’re selling a business that also has land and buildings, you are going to want to allocate in the purchase agreement the highest value to the land and buildings and the lowest value to the other stuff (personal property that can’t be included in a 1031 exchange). You may have very low basis in that other stuff because there’s been some rapid depreciation that’s been available. In some situations, it can make a big difference.
Let’s say you’re selling a trucking company. After paying the bank back, and then paying the taxes on your recaptured depreciation, you may not have much to show for the sale. So you have to think about how to maximize the tax-efficiency of your transaction, and make sure that you have enough cash left over to reinvest into something that’s going to give you a steady stream of cash in your retirement years. You can utilize 1031 exchanges to redeploy into real estate investments that will generate a steady stream of retirement income, but you have to keep that equity available for deployment. Otherwise, it might not make sense to sell your business.
Start Your Like-Kind Real Estate Exchange
Are you ready to start saving money on the sale of investment real estate? If the answer to that is yes, then a 1031 exchange might be the right option for you! With a 1031 like-kind exchange, you can defer your capital gains tax burden by reinvesting your sales proceeds into a continued investment replacement property. This keeps your money working for you over time while delaying a potentially huge capital gains tax bill. Contact CPEC1031, LLC today to speak with our intermediaries about your next 1031 exchange!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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