Real estate investors is very profitable for the past several years. But the market is changing and it may be the perfect time for investors to be on the lookout for the latest strategy. For those who own rentals, the trend was to buy a rental property, see it appreciate, and buy another rental property using a 1031 tax-deferred exchange to eliminate current capital gains taxes on the profits. However, there simply aren’t as many solid investment properties available in today’s real estate market. The increase in the cost are real estate has not remained in the balance along with the rental income. If you are thinking about selling your investment properties now, you probably are concerned about the massive tax bill you will face.
Low net rent income, demanding tenants, and a large amount of equity at risk have caused almost all real estate owners to consider selling their real estate. However, there are countless investors who feel that they are stuck with the property right and now they would rather sell it. Many are hesitant to reinvest in a new 1031 exchange property because of low rental rates, but are unwilling to cash out on the property out of fear of paying substantial capital gains taxes. The good news is that for many owners and investors, it is important to understand that a Private Annuity Trust offers a way to defer paying capital gains taxes, create a lifetime income and protect your assets as well.
With the Private Annuity Trust, the investors of real estate have a legal and safe way to exit from the labor of property management, the aggravations of dealing with the tenants, and the anxiety of thinking how the property values will have a fare in the existing real estate market.With the Trust, there’s no pressure to reinvest right away to avoid paying capital gains.
Prior to the sale of the property is final, the property is transferred into the Private Annuity Trust. The Trust assets are protected from creditors and lawsuits, and the assets in the Trust can eventually pass to the seller’s beneficiaries without worry about the current 46% estate tax rate. They just want to sell some of their assets and place their money into a more diversified, completely protected, lower maintenance investment vehicle with predictable cash flow.
Payments from the trust don’t need to begin right away-not until age seventy. If you’re ready to take back the reins on your investment vision, talk to a professional today to explore how Private Annuity Trusts may benefit your particular situation.