Minimizing Capital Gains

[Harith Naga]

I have a seller that may be interested in selling. But he would like to minimize capital gains from his equity in the property. Anything we can do to help facilitate that. Perhaps have him finance, and thus not one lump sum? Any other ideas? Thanks ahead of time!

[Nick B.]

Sell at cost? No gain - no tax pain :-)

[Basit Siddiqi]

@Harith Naga

The seller can defer the gain through a 1031 transaction. However, he would need to acquire another property within a specific IRS timeframe.

He can also accept an installment plan(seller financing) which allows him to pay the tax over the time of the installment agreement.

[Thomas Rutkowski]

I'm a little late to the thread, but a good solution for your seller might be to use a Monetized Installment Sale instead of a 1031 exchange. This would allow them to defer the taxes on the sale and still get cash after closing. In a monetized installment sale you defer the taxes by selling on an installment contract (seller financing) through an intermediary. The monetization loan lets the seller walk away from the closing with cash that can be used for any purpose. They don't HAVE to get back into real estate right now. Lots of CA sellers are deferring their capital gains using this planning approach

[Cj McDougal]

Hi Tom, 

I am very interested in getting more info on the Monetized Installment Sale. Do you have a referral? I am in SoCal. I too am trying to lower the taxes on a triplex non owner occ rental property. Can you still participate in a Monetized Installment Sale if theres still a bank mortgage on the property?

Thanks

CJ

[Tyler Kastelberg]

Cj McDougal
CJ: You can definitely still execute a monetized installment sale if there is an outstanding loan. I know many SoCal investors who have used this strategy.

The providers I know have a minimum sale size. How big is your sale?