5 Lessons Learned: Investments

How To Improve Your Real Estate Investment Choices By Avoiding Capital Gains

For the past years, investors of real estate have been very profitable. But the market is changing and it may be time for many investors to be on the lookout for a new strategy. For those who own rentals, the trend was to buy a rental property, see it appreciate, and buy another rental property using a 1031 tax-deferred exchange to eliminate current capital gains taxes on the profits. However, there simply aren’t as many solid investment properties available in today’s real estate market. The increase in the prices are real estate has not remained in balance together with the rental income. If you are thinking about selling your investment properties now, you probably are concerned about the massive tax bill you will face.

Low net rent income, demanding tenants, and a large amount of equity at risk have caused almost all real estate owners to consider selling their real estate. But there are countless investors who feel they are “stuck” with property right now that they’d rather sell. Many are hesitant to reinvest in a new 1031 exchange property because of low rental rates, but are unwilling to cash out on the property out of fear of paying considerable capital gains taxes. The news today is that for many owners and investors, it is important to understand that a Private Annuity Trust offers a way to defer paying capital gains taxes, create a lifetime income and protect your assets as well.

With the Private Annuity Trust, real estate investors have a safe and legal way to exit from the labor of property management, the aggravations in dealing with most of the tenants, and the anxiety of wondering how property values will fare in the present real estate market.Instead investors can avoid making hasty decisions, feel out the market, and decide whether or not they even want to stay in real estate.

When the property is ultimately sold, the Trust can begin providing a lifetime stream of income, with taxes deferred over the seller’s lifetime. The Trust assets are protected from lawsuits, and creditors, and the assets in the Trust can eventually pass to the seller’s beneficiaries without worry about the present prevailing 46% estate tax rate. Many investors are concerned that due to significant property appreciation over the last several years, they are now too heavily invested in real estate.

Payments from the trust don’t need to begin right away-not until age seventy. Perhaps its time to take back the control you deserve over your real estate investment career and begin investing on your own terms.

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