Appreciated Asset Professionals are experts in
designing and implementing tax-smart, tax-exempt
transactions for appreciated assets.
If you
have appreciated assets these are questions you
need to consider. Some of the considerations are:
- Are you in the accrual or distribution phase of your life?
- What type of investment do you wish to sell? Real estate, stocks, a business, a rare collection of art or cars?
- Do you need income now or later in retirement?
- Do you have a large estate and heirs subject to estate tax?
- Do you wish to defer capital gains tax forever, or spread it out over a long period of time?
- What is your risk tolerance?
Real
Estate
Businesses
Collectibles
Securities
Each
situation is different and a plan should be devised
to suit your individual needs. The capital gains
tax strategies available change and evolve as tax
laws change and evolve. There is no one best
strategy- the most important consideration should
be to know what options you have available, compare
the pros and cons, and choose whichever you feel
most benefits you and your family.
Let's take an example of when someone has an investment property that has appreciated greatly. We often encounter a number of clients with the same dilemmas on a regular basis. They purchased investment property years ago and now it is worth double or triple of what they paid. They are tired of being landlords and of all the headaches of property management. They are also in a position where they could use additional passive income to either live on or invest towards their retirement.
They feel this may be a good time to sell and enjoy their profits. They get a rude awakening, however, when they find out how much they will owe the IRS in capital gains tax, recaptured depreciation, and additional income tax in the year in which they sell. In California, they even get another 3.3% withheld for a year until all taxes are settled. Some cities levy their own taxes. The sale may even trigger the dreaded Alternative Minimum Tax. Ouch!
Let's take an example of when someone has an investment property that has appreciated greatly. We often encounter a number of clients with the same dilemmas on a regular basis. They purchased investment property years ago and now it is worth double or triple of what they paid. They are tired of being landlords and of all the headaches of property management. They are also in a position where they could use additional passive income to either live on or invest towards their retirement.
They feel this may be a good time to sell and enjoy their profits. They get a rude awakening, however, when they find out how much they will owe the IRS in capital gains tax, recaptured depreciation, and additional income tax in the year in which they sell. In California, they even get another 3.3% withheld for a year until all taxes are settled. Some cities levy their own taxes. The sale may even trigger the dreaded Alternative Minimum Tax. Ouch!
