The trick is always in the planning. Sometimes you can have your cake and eat it too.
In helping a client determine what the best strategy was for them, a couple of things came into play. They had land that had really appreciated that they had owned for about 10 years and they wanted to sell. The sale price was about 800K (gains 700K).
They would like to exchange for two land parcels that were 150K each and eventually build on them. They didn't particularly want any other properties at this point. They were still left with 500K from their exchange that they would have owed taxes on.
When introduced to the concept of exchanging that 500K with a tenant in common property that would not only provide them income and appreciation potential without management hassles, this fit their needs perfectly.
They will be able to do a complete exchange, not pay any capital gains tax at this time, have their two lots for future use and have income from a good portion that is 100% more than they were getting from vacant land over the last 10 years.
They are well on their way to really building their wealth and retirement nest egg.
Paula Straub
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Interview with the Pros - Educational resource
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