Real estate is a big industry. It has multiple phenomenon, legal aspects and what not. It isn’t as simple as seeing a good site and buying it. There are many more things attached with this process. One of these is the concept of structured sale. It is supposed to make selling of real estate properties easier with maximum capital gains but minimal capital gains tax for the seller. Let’s have a look at what this is all about.
What is a “structured sale” and why would you use one?
A structured sale is basically like selling a property on installments. A structured sale is a special type of installment sale pursuant to Internal Revenue Code Section 453. This tricks the income stats so you don’t have a huge profit at once. This means technically you won’t have a noticeable capital gain and as a result, you get to pay minimal to no capital gains tax as a seller. This isn’t a traditional installments payment method. The sale is shown as an installment, but the entire future funds are paid with an interest. This payment schedule is decided as the seller wishes. You should consider structured sale if you’re looking a way past heavy capital gains tax.
What should you consider when using a structured sale annuity to fund your installment sale?
The first and foremost thing you must assure in a structured sale is the buyer. Since the method is dependent on trust, you need to make sure the buyer will pay the installments in the future and not turn out to be scam. Consider the financial records, financial stability, etc. The more reliable way of this to get a letter of credit. However, it is an extra costly step, which most sellers want to skip.
Sometimes the payments are connected with a bigger authority for example a selling firm or an insurance company. The payments are to be made through these companies so the risk is lesser in such a case.
How do you get about setting up a Structured Sale of Real Estate or business property?
Since structured sales are a pretty new concept, there aren’t many experts present in the market. However, the process of setting up structured sale for a property is pretty simple.
The first step is an agreement between seller and buyer that payments will be made, what will be the schedule, etc. The buyer assigns as obligation like an insurance company. The assigned company provides the funds and the last step is the payment being given to the seller. It is as simple as that.
What are the benefits of a structured installment sale annuity?
The biggest benefit of this method is minimal capital gains tax. Other than that, you get assured that the payments will be made and there will not be any fraud. The risk of buyer not being able to pay installments is also reduced. Lastly, this method provides a financial security. The seller has the freedom to plan payments. The power of cash flow remains with the seller.
How CATD Investments help you for Residential Structured Sale?
CATD (California Trust Deed Investments) investments makes your real estate sales easy. Our services provide you an easy structured sale. We already have a buyer ready when we first purchase your property from you. The payment we give to you is in form of cash, but along with that you get an installment note. You are paid the cash after adjusting any loans and selling expenses. After that the remaining payment is mentioned on the installment note. Since you only have to pay tax on the cash you received, the capital gains tax is very minimal. You get a good valued sale but get leverage on taxation. Our methods are completely legal and easy.
With our services, you have nothing to worry about. You can get a structured sale for your property in the easiest way possible. Call us today at 818.865.1570 for a FREE Consultation.