Sunrise Communities - Jan/Feb/Mar 2019

Sunrise Communities - Jan/Feb/Mar 2019

Jan/Feb/Mar 2019

INFORMER MySunriseCommunity.com I 727-216-7903

DEFERRED SALES TRUST

Part 1 of Our Ongoing Series: Solutions for Mobile Home Park Owners Struggling With Capital Gains Tax • Do you want to be able to buy back into L et’s face it: Capital gains tax and depreciation recapture are serious problems facing individuals who want to sell their highly

and back out of real estate, loan the funds for business purposes such as a real estate loan, buy into a business, or develop RE on your own timing — all capital gains tax deferred, without having to follow any timing guidelines?

appreciated assets. According to the American Bankers Association, $17 trillion in assets will pass from one generation to another over the next 20 years. This is the largest generation in the history of the planet, known as the “baby boomers.” 77 million are starting to retire in the U.S. alone, with 10,000 baby boomers turning 65 every day. The top 3 percent of wealth in America owns commercial real estate. Current state and federal capital gains tax rates plus depreciation recapture collectively add up to 37–50 percent of their gain, so it’s no wonder many owners are reluctant to sell. But what choice do we have, other than a 1031 exchange or Delaware Statutory Trust? Is there another way to deal with the capital gains tax deficits that so many investors experience when they sell their business or real estate assets that does not require them to purchase a new property and start all over again with new management, new tenants, and new liability? • Do you want to trade your property and/ or business, toilets, trash, management, and liability for time, travel, liquidity, diversification, and retirement? • Are you selling your property or business and want to defer your capital gains tax instead of paying it to Uncle Sam or have to do a 1031 exchange and start over with a new property, new management, and new liability? • Are high capital gains taxes around 37–50 percent of your gain and restrictive 1031 laws holding you back from selling your commercial real estate?

There is another way, and for some, it’s a better way. It’s called a deferred sales trust (not to be confused with a Delaware Statutory Trust). Most mobile home park owners struggle with capital gains tax and depreciation recapture when they sell their properties or businesses. We use a deferred sales trust to help them gain tax deferral, freedom, flexibility, liquidity, and diversification with their funds so they can create and preserve more wealth. What is a deferred sales trust? It is a manufactured installment note. The basis of this is the “seller carry back” IRC 453 tax law, which goes back to the 1920s. The process starts when a property owner sells their property to a trust owned by a third-party company. The trust sells the property or business. Next, the trust "pays" you. The payment isn't in cash but with a payment contract called an "installment contract." The contract promises to make payments to you over an agreed period of time. There are zero taxes to the trust on the sale since the trust "purchased" the property from you. The payment is made with an installment contract, which makes payments to you over an agreed period of time. The options for when and how payments can be made are flexible, as are where the funds are invested and who manages the funds. The tax code doesn't require payment of the capital gains until you start receiving installment payments. If you would like to learn more about the deferred sales trust and how it is different from a 1031 exchange or Delaware Statutory Trust, you can attend a free live webinar that will walk you through the strategy and the step-by-step process every Friday at 10 a.m. PST. Visit our website to register at CapitalGainsTaxSolutions.com or call us directly to learn more at 916-886-2986 Bonus: I was recently on Kevin Bupp's podcast, "Real Estate Investing for Cashflow," if you would like to learn more about the deferred sale trust here: Episode 190: The Little Known Secret to Legally Defer Your Capital Gains from Real Estate and Preserving Your Wealth via the Deferred Sales Trust – with Brett Swarts

727-216-7903 • 1

Published by The Newsletter Pro • www.TheNewsletterPro.com

Embracing ‘Spendophobia’ You’ve spent your entire life being told to save, save, save. Now you’re finally retired, so it’s time to spend some of that money — but you’re scared! This is only natural because it means breaking a lifelong habit of socking away money and refusing to touch it. 3Ways to Invest in Yourself After Retirement

in-ground pool or a private tennis court might be outside your budget, but new kitchen countertops or a deeper tub will add a touch of luxury to the space you spend the most time in. Upgrading your home is almost always a good investment because it adds equity, which will pay off down the road. That extra cash will come in handy if you decide to sell later on in order to downsize or you plan to enter assisted living. Don’t forget to set aside money for ongoing maintenance, such as a new water heater or roof repairs. Go Back to College It might sound counterintuitive to go to college when you’re not planning to go back to work, but continuing your education after retirement offers many benefits. Many individuals find themselves with more time on their hands than they’re accustomed to, and without a plan to fill this time, it’s easy to become depressed or isolated. Numerous studies have shown that continuing to exercise your brain has a positive impact on cognitive function, so taking a few classes can be the perfect way to stay busy and keep your mind sharp. Attending school late in life is also a great

The first step to a healthy community is a proper screening process. Being able to suss out bad actors and unreliable tenants before they have a chance to move in will always be more beneficial than simply giving everyone the benefit of the doubt and paying the price later. Maybe 30 years ago, business could be done based on the power of a handshake alone, but these days, it pays to add a few more layers to the screening process. Check Those Credit Scores One of the best factors to gauge a tenant’s reliability is their credit score. In running a national credit check, you aren’t necessarily looking for someone with a picture-perfect record; rather, you are looking to spot good habits. More than just giving you a number, these checks show you how their score has changed over time, letting you piece together how financially disciplined a prospect truly is. Verify References It happens more often than you think: Unwilling to let their last landlord vouch for them, a prospective tenant lists a friend or relative. Thanks to the internet, these ruses are easier to spot than ever before. By simply Googling “[the county your prospect last You’re not alone. A recent study of retirees’ spending habits showed many people actually spend less than they can afford to. They’re scared of the “what ifs” that come with living on a fixed income. However, at age 70 1/2, you have to start taking the required minimum distributions (RMDs) from your traditional IRA and 401(k) whether you want to or not. Instead of stressing over the fact that you’re pulling money out of these accounts, embrace the opportunity to do something for yourself. Travel It can be tempting to hold off spending money as long as possible. After all, who knows how long you need your savings to last? Travel, however, is one thing you can indulge in early without feeling guilty. Even the most leisurely trips can be physically demanding, so it’s better to see the world at 70 rather than wait until you’re 90. To keep yourself on track financially, use the bucket system to set up a separate savings account just for travel. Invest in Your Home Once you no longer have to work five days a week, you’ll be in your home more often, so why not make it amazing? An Know Before You Rent Screening Best Practices

opportunity to indulge your passions and learn more about subjects you’ve always been interested in. Many colleges offer free classes or reduced tuition to seniors, so check with your local schools and see what classes or programs they have available.

lived in] property records” you can access a >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6

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