This
is a summary on the versatile aspects that might benefit the seller
or you. we hold conference calls with qualified candidates who are
selling or know someone who is selling a capital asset starting at
$500,000.
But consider selling your appreciated capital asset in an
Installment Sale transaction pursuant to Section 453 of the Internal
Revenue Code (IRC), without the credit and collateral risk that
typically accompany an installment sale.
Using an Installment Sale in IRC section 453 coupled with a Loan
when selling capital assets should always be one of the choices to
be considered to solve tax issues and maximize profit for the Seller
when investment real estate and high-end residential property is to
be sold or when a business is to be sold.
From a Seller’s viewpoint, in nearly every situation, this type of
transaction is the most tax-efficient, versatile, un-entangled and
profitable way to sell capital assets—whether the asset is held for
business or investment purposes or entirely for personal use. It is
important to note that this planning approach is not a tax shelter.
It is simply a way to sell capital assets that has been in tax law
since the laws were created in 1913. It is just not well known.
Here is some insight about what the installment sale coupled with a
loan might achieve. If the asset is worth more than the Seller's tax
basis, a 453M transaction, in tandem with a separate loan from a
cooperating third-party lender might accomplish the following:
1. Deferral of the tax on the gain and depreciation recapture for as
long as 30-years, with no net tax cost for that entire time
2. Because of that tax deferral and because of inflation in the
interim, actual and substantial reduction in the real tax cost of
the sale increases during the 30-year duration
3. Receive at close of escrow a near-equivalent amount of the
installment sale in loan proceeds from a third party lender
tax-free.
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