For the past years, investors of real estate have been very profitable. However, the market is changing and it may be time for a lot of investors to be on the lookout for latest strategy. For those who own rentals, the greatest trend was to purchase a rental property and see it in order to appreciate it and then buy another rental property through a 1031 tax-deferred exchange system to eliminate the existing capital gains tax. However there are not as many solid investment properties accessible in the real estate market. The increase in the prices are real estate has not remained in balance together with the rental income. If you are thinking about selling your investment properties, you probably are very much concerned about the large tax bill you will face at the end of the day.
Low rent income, demanding tenants and a huge amount of equity at risk have caused all real estate owners in order 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 excellent news is that for most investors and owners, it is very important to know and understand that a Private Annuity Trust presents a way to defer the paying capital gains taxes, thus creating a lifetime income and protect your assets also.
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. At the same time, they don’t want to fork over up to 30% of their investment profits in the form of capital gains tax payments if they don’t find a suitable investment in time.
If no money is paid from the trust, taxes are further deferred until the payments actually are received and the money can sit and accumulate interest until the seller needs the income. 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.