Broker Check

Structured Sales - Real Estate

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Real estate can be an attractive and lucrative investment. An individual can purchase and manage several rental or commercial properties that provide a substantial stream of income. However, that income is taxed at ordinary income rates. Property taxes, management fees, expenses for repairs and vacancies can substantially reduce the net income derived from the properties.



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In addition, the owner may be tired of the responsibilities of ownership and wish to be free to travel or spend their time with other more leisurely activities! It may be time to sell, but there are taxes, market risks and investment options to consider.

However, if the time and circumstances are right, a Structured Sale can provide the seller of an investment property the following benefits:


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Tax Deferral

Because a Structured Sale is really an installment sale with guaranteed payments backed by U.S. Treasuries, all applicable taxes are deferred until the income is actually received. As a result, taxes are spread out over the term of the payments. A Structured Sales agreement can also be used advantageously to spread out a balloon payment over multiple tax periods.

Flexibility

Single or multiple streams of payments can be precisely tailored to fit the seller’s future needs.

Period Certain – Payments can be set to cover any number of years, from two through 30.

Lump sums – The seller can time lump sum payments in the future for certain expenses such as college education or scheduled balloon payments.

Payment streams can be scheduled to occur on a monthly, quarterly or annual basis.

Seller can defer the recognition of income and the associated taxes for up to 20 years into the future.

A Structured Sales agreement can easily facilitate the requirements of multiple partners with multiple needs.

A Structured Sales agreement is NOT an all or nothing option. The seller can receive a portion of the proceeds in cash, execute a partial exchange and/or structure the balance. Any and all options are available, depending on the seller’s specific needs.

Guaranteed Payments

All future payments are guaranteed.

Payments are not subject to fluctuations in the market.

Security

Payments are made and backed by US Treasuries. With a Structured Sale, there is NO risk of buyer default.

Potentially Higher Returns

By deferring and potentially reducing the impact of capital gains tax, the returns on investments made using the proceeds of a Structured Sale may provide higher returns than would be achievable by investing the after tax proceeds from a traditional sale.

Contact us to find out more.

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