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Long Term Planning for Real Estate and Income Taxes

The best strategies take time and can save or defer significant capital gains taxes.

The importance of planning all of your retirement real estate transactions as much in advance as possible cannot be overstated. Advance preparation allows you to take advantage of existing strategies as well as preparing for unforeseen changes in the law. In each case, the goal is to reduce or defer capital gains taxes so your retirement nest egg increases rather than decreases at the time of your real estate transaction.

The key to real estate transactions in retirement is to reduce or defer capital gains taxes that are incurred at the time of sale of real estate. With the growing value of appreciated property, paying the capital gains tax and "getting it over with," is not only bad advice, but can make a significant dent in your retirement assets.

Pre-retirees have an endless set of scenarios that may be relevant to their planning, such as:

  • Downsizing to create an income stream
  • Using undeveloped property to create an income stream
  • Selling investment real estate and creating a charitable foundation
  • Selling highly appreciated real estate and solving very different needs of sellers
  • Selling investment property and buying a retirement home that must be rented for at least two years to quality for a 1031 exchange.
  • Selling a business property and purchasing resort rental property that will become a vacation home.

Each of these retirement real estate scenarios have time frames and legal nuances that require the attention of an advisor who understands how to manage highly appreciated real estate in retirement. If you plan to leave your current primary residence or sell business or investment real estate, start planning now so that multiple options will be available to you.

Contact us to begin charting your best course to a financially secure tomorrow