Structured sales, or as I like to call them structured installment sales, are about to get a really big boost for 2019 for a variety of reasons, all of which I cover in this quick video update.
The first is that we are about to see a new, major league, life insurance company enter the market to underwrite and pay out the structured sale using a secured annuity funding approach. This is a really big deal, but until they formally announce it themselves, which I’m told will be in Q2 of this year, I’ll hold off on identifying the company. Just be assured it’s a major brand name with top level financial ratings. This new company will have a major impact on the use of structured sales as it removes much of the uncertainty about the off shore/trust company approach that has been required ever since Prudential and Allstate exited the structured sales market several years ago. As soon as we get their underwriting details and authorization we will announce it here the same day.
Second is that the 2018 tax bill is finally starting to hit many sellers of highly appreciated real estate that live in states with substantial taxes on the sale of capital assets. Most of the calls I get are from California, NY, Illinois and other states where the combined tax hit on the sale of property can often top out at or near 40% rates when state and federal taxes are calculated. This combined with the reduced write off’s allowed to many high income clients is prompting many people to investigate how they might spread out the tax hit on their real estate in a safe, secured installment sale basis, while still earning a competitive yield on the money they allocate to the structured sale.
Finally, we are on the tail end of a stock market boom and for many people who are selling real estate now, they are uneasy about the prospect of investing all of their proceed into the stock market at once. If there is some bad luck in market timing, a good chunk of that single investment can be eroded just as they are entering retirement, so the ability to spread the payments out of time, to both provide regular income but to also reinvest in the market through income averaging, makes a great deal of sense.
If you want to know more about structured sales, use the contact me page or just email my office at Wahlstrom and Associates.