When highly valued real estate is sold, property owners may find that their tax liability is higher than the 20% maximum capital gains tax rate we think of initially. In Florida, we are fortunate that we don’t have a personal income tax, but we are subject to the IRS 3.8% Net Investment Income Tax. Investors and real estate brokers have long had Section 1031, Like Kind Exchanges, to help postpone the tax until the current property owned is sold. But there are other strategies that can be used to legally defer the capital gains tax for up to 30 years yet receive funds nearly equivalent to the proceeds of the sale - tax free - at the close of escrow.
This strategy works if funds are still in escrow or a 1031 exchange is collapsing. Once the escrow closes on a sale, the seller is locked in on the tax obligation. If you or someone you know is contemplating a sale of appreciated real property, a tax analysis can identify any tax problem, a tax strategy can be crafted and put in place, and a significant portion of your profits preserved. Let us help you preserve more of your sales proceeds!!
Contact us at 850-973-4353 or email at info@schoellestax.com.
Pam Schoelles is a Certified Tax Coach and Advanced Tax Planning Expert at Schoelles & Associates, Inc. in north Florida serving clients nationwide.