What is a structured sale? How can I use it to defer capital gains taxes?

In this weeks edition of Speaking of Settlements, I review the concept of structured sales, updated for 2013 and the market and tax issues we are facing this year. In this brief tutorial I look at the issue of how a structured sale works, the benefit of tax deferral and putting 100% of the proceeds of a real state sale to work vs paying a huge tax bill on the sale of appreciate real estate.

Structured sales, the key to major tax savings on the sale of appreciated real estate.

Structured sales, the key to major tax savings on the sale of appreciated real estate.

In the process of a structured sale there are a few key items you need to watch out for given the issues we face in 2013:

  • Have you notified the buyer of the property of your intention to structure your sale and provided them the necessary paperwork, information and process that they will need to sign off on to make it work.
  • What funding options do you have for your structured sale? As mentioned in our earlier commentary, the recent decision by Allstate Financial to close their structured settlement division has left a void in the annuity funding option for structured sales. Do you want to wait for a life market to enter the arena or does it make sense to look at private funding options through other assignment companies?
  • What are you trying to achieve with a structured sale? Is it about just moving money from one tax year to the next, in which case we argue you should NOT be using this process, OR, are you seriously considering a long term cash flow plan using 100% of your proceeds so that your tax hit is spread over many years and is integrated into your business, financial or estate plan?

Regardless of your situation, we think you need to stay current on structured sales, know how they work and what you need to do to make them part of your real estate selling strategy. Subscribe to our page, like us on Facebook or simply watch these posting for more information during 2013 on the topic of structured sales.

Structured sales and 1031 exchange, tax deferral options for capital gains

In this weeks edition of Speaking of Settlements, Mark Wahlstrom looks at the idea of whether or not 1031 exchange tactics can be used to "wait out" the current void in the structured sale market caused by the departure of Allstate Financial as an underwriter of structured sale annuity funding programs.

Structured sale and 1031 exchange, the key to tax savings?

Structured sale and 1031 exchange, the key to tax savings?

Both concepts, the 1031 exchange and the structured sale, have been around for decades and used successfully in the pre-real estate melt down era of the late 1990's and mid 2000's. However, over the last 5 to 7 years, the collapse of both residential and commercial real estate, coupled with concerns about potentially increased capital gains rates, largely smothered the potential of this once promising concept of tax deferral and cash flow planning using structured sales.

Evidence so far in 2013 suggests that interest in structured sales is surging as real estate prices have begun to rebound at the exact same time as the first substantial increase in capital gains and ordinary income tax rates became law in 2013. More sellers of real estate have been looking for options to spread out the tax hit in a secure fashion and structured sales appear to fill a growing need of tax planners, CPA's and real estate investors of all sizes. In this weeks video Mark examines some timely ideas for those who have pending sales or potential sales and are wondering what options there might be in the interim.

Mark Wahlstrom is the President of Wahlstrom & Associates and one of the nations leading experts in structured sales, Oil & Gas lease bonus structures, structured attorney fee's and mass tort settlement administration.