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Popular Trusts Shield Real-Estate Profits
Private Annuity Trusts Reduce Bite of Estate Tax And Defer Capital Gains, but IRS Scrutiny Grows. The Soaring real-estate prices of the past few years are helping to feed the populatity of a complex tax-savings technique called a "private annuity trust."
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Asset Protection is a Matter of Trusts
Little-known tax-deferral program can save you money and give a boost to your retirement.It's no secret that the Bay Area real estate market is on fire. What many don't know, however, is how much higher home values increase Uncle Sam's cut of a home sale. It's not uncommon for homeowners to owe hundreds of thousands of dollars in capital gains taxes, depreciation recapture taxes and other costs after they sell their house.
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PRIVATE ANNUITY TRUSTS GET NEW LEASE ON LIFE
Sure, individual retail real estate investors want to defer capital gains taxes on the properties they sell. But those who want to avoid the hassles of finding and buying the replacement properties a 1031 exchange requires could opt for an estate-planning vehicle called a private annuity trust.
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Selling Your Real Estate Without Paying Taxes
With the higher valuations come new and expensive tax implications. Capital gains taxes, depreciation recapture taxes, state taxes, estate taxes and loss of deductions all threaten to take up to 75% of your gains. Sellers are now routinely facing huge gains of $1 million, $4 million or more, resulting in tax bills in the hundreds of thousands and even millions of dollars.
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Selling Your Real Estate Without Paying Taxes
Real Estate values have soared. With the higher valuations come new and expensive tax implications. Capital gains taxes, depreciation recapture taxes, state taxes, estate taxes and loss of deductions all threaten to take up to 75% of your gains.
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>>Also seen in Homes&Land Magazine
Selling your real estate without paying taxes
Sellers of second homes and other investment properties are now routinely facing huge gains of $1 million, $5 million, or more, resulting in tax bills in the hundreds of thousands, and even millions of dollars. Because of these tax consequences many people are delaying selling their properties, which in the end may be shortsighted considering the fact that we may or may not be at the top of the market.
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