So a friend mine was approached to sell his auto body business along with the property and building. He has owned it for about 32 years and the offer is very attractive so he has been considering it as he had previously considered retiring within the next 3 years anyway. I've been trying to help him figure out his next move but I don't think I've been very helpful as my knowledge of these kinds of transactions is slim. Any recommendations on shielding him from the inevitably large tax burden? Do they have anything like a 1031 like-kind exchange for this kind of stuff? I'm just trying to help him figure out the best possible game plan, whether that be rolling the money into another business, investment, retirement account, etc. We're going to consult some other professionals but figured it couldn't hurt to cast out the question to the creative minds of the BP community.
Any suggestions or insight? Thanks!!!
Some brainstorming ideas-consider selling the real estate and business in 2 different transactions. That may give more options-seller financing, 1031 for the real estate, etc. but it is hard to help without more goal details.
@Matthew Rembish , The bad news is that until 2018 he could have 1031d the land and building for other investment real estate and the FFE (furnishings fixtures, and equipment) for other business equipment. But that was changed with the new tax code.
The good news - Your friend can still 1031 exchange the land and building portion for other investment real estate of any type. He will have to pay tax on the part that is FFE, Good will, or a non-compete. But he and his accountant can work together in the negotiations to maximize the allocation to land/building and minimize the remainder.
@Carl Fischer Thanks, Carl! Unfortunately, he cannot separate the two because that's part of the deal but I appreciate the advice. I'll definitely have to do some more research.
@Dave Foster I really appreciate all of the insight, Dave. I didn't know that was the case with the new tax code. I wish he could break the business apart from the real estate/building but unfortunately, that's not an option.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing