Exit Strategy
Be sure that you have strategies for “exiting” your investment in a variety of different situations. Know what your exit plans are before you buy a property! If you always start with the end in mind, you’ll be better prepared to avoid unintended tax results. Keystone CPA professionals are well versed in the various exit strategies available to real estate investors and can assist you in analyzing the various tax & wealth impacts from the multiple exit strategies you may be contemplating for your investment projects. In order to minimize your tax burden, the steps to set-up the most effective tax savings strategy often begin with how you structure both the acquisition and disposition of the properties. Some of the more common exit strategies for real estate investors are:
· Generating Forced appreciation
o Development or redevelopment
o Increase rents and/or decrease expenses
o Improve management and/or tenant mix
o Changing asset classes
o Improvements to the property
· Refinancing
· Exchanging for new properties
· Installment sale / Owner financing
· Contributing the property to a capital gains bypass trust (i.e. a Charitable Remainder Trust)
· Creating a private annuity trust
· Exchanging into an UPREIT
· Gifting
· Combining any or all of the above options
The tax implications are often one of the biggest expenditure items in your investment. In order to determine the real rate of return on an investment, the investor must take into consideration the tax implications of the transaction as a whole. By having Keystone CPA’s financial service professionals on your team, you will be able to take full advantage of the tax savings and maximize the return on your investments.
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