Slide 2:
Normal Transaction Real Estate Sell Property Bob & Martha
Age: 60 Sale Price $2,000,000 Net Sale Proceeds $2,000,000 Taxable Gain $1,000,000 $
Slide 3:
Normal Taxation $1,757,000
After tax proceeds Taxes: $243,000 Real Estate Sell Property Sale Price $2,000,000 Bob & Martha
Age: 60 Federal and State* taxes 24.3%
*California Net Sale Proceeds $2,000,000 $
Slide 4:
Normal Transaction vs. The Plan Real Estate Sell Property The taxed and tax deferred illustration both assume returns of 7%, compounded for 30 years, net of the $139,368 annual distribution. Results for both illustrations are shown net after annual income taxes. Annual income in both illustration is assumed to be taxed at 15%. This illustration makes assumptions that not all investors face. There may be considerations that may effect whether this plan is appropriate for a particular seller. It is necessary for any participant to review their tax situation with their tax advisor to ascertain if this type of program is right for them. Both assume 7% return and $139,368 per year for 30 years
Normal Transaction: $1,757,000 becomes $209,890 With the Plan: $2,000,000 grows to $2,041,408
The Difference is the compounding of the $243,000 for taxes $
Slide 5:
IRS receives 100% of the tax due but it is paid over the length of the installment contract rather than paid in full up front.
It’s like an interest free loan from the IRS! Annual Income Recap:
Tax Free Basis $ 30,392
Capital Gain $ 34,967
Ordinary $ 74,009
Total Income $139,368 Real Estate Sale Price $2,000,000 $ Bob and Martha pay taxes:
Capital gains = $8,497 and ordinary income tax which is a percentage determined by their tax bracket The Plan
Slide 6:
Questions Bob & Martha Had On The Plan Can we use a portion of the proceeds to re-invest in real estate at a later time?
Yes
If I’m in escrow right now can I still use The Plan?
Yes
Can I use a The Plan to sell my business or commercial real estate, or a second home or even investment residential?
Yes
Slide 7:
The Plan Advantages Defers capital gains tax
Income tax savings – when highly appreciated property is sold the seller defers recognition of gain until receipt of payments
Estate Tax Savings – With additional planning The Plan removes transferred property and all future appreciation from the estate without use of gift or estate tax exemptions
Maintains Family Wealth – Maintains wealth within the family
Estate Liquidity – Converts an illiquid asset into monthly payments
Payment Flexibility – Provides a flexible income from The Plan
Asset Protection – The Plan may place the transferred property beyond the reach of potential creditors and litigants if the transferor retains no interest in the transferred property