Retirement / Exit Strategies
The structured sale is an ingenious approach, that has gained popularity in recent years, because of its ability to provide both tax avoidance and a high degree of security to sellers. With a structured sale, sellers receive guaranteed payments over a specified period of time. This allows them to recognize gains, income, and return of basis as each payment is received, instead of suffering a large tax obligation at the time of sale.
Structured sales are an attractive alternative to1031 exchanges for sellers, who want to move out of the real estate market, or who can't find desirable properties to exchange into in their particular market.
Once a buyer and seller have settled on a sales price, proceeds from the sale are transferred to an assignment company. This company then uses the funds from the sale to purchase an annuity from a large, highly rated insurance company. The insurer makes payments to the assignment company, which in turn makes payments to the seller under the terms of the sale. This use of installment payments allows sellers to pay taxes on their sale over time, by deferring recognition of gains from the year of the sale to the year that installments are received.
Structured sales are an excellent tool, but their complexity requires someone with experience to put them together properly. Mike Carlson is very knowledgeable about the intricacies of structured sales and has personally seen them tangibly benefit many clients. After Mike has had a chance to analyze your current position, he will be able to quickly determine if this approach might be a good fit for your situation.