Monday, April 16, 2007

Things That Make Me Go "Huh?"

Sometimes I just have to shake my head and chuckle.

I get alerts for news articles and press releases that concern capital gains so I can keep up on what everyone is doing and publishing.

Today there was a Press Release put out by one of the larger Structured Sales companies. The title had something to do with How Older Women and Widows were now inquiring about the Structured Sales Concept for 1031 Exchanges.

That was confusing enough, as the two are mutually exclusive. Farther down in the article they did mention the Structured Sale was in lieu of further 1031 exchanges.

Then they gave an example. One might think they would use an example of an older woman as the article title implied, but they used a daughter selling her Dad's second home to pay for his medical nursing care.

The daughter was "brought to tears" by the concept of her dad getting 10 years of payments totaling 300K (however, no mention was even made of the amount at time of sale for comparison).

Then came this sentence: "A traditional 1031 exchange would require the capital gains tax be paid in the year of sale."

This is what made me say "Huh?". A traditional 1031 exchange means you get to defer all capital gains taxes until you stop exchanging and sell outright. Is that what they really meant to say? Is it just me they confused?

Besides, the example was for a sale of a "second home" that didn't even qualify for a 1031 exchange in the first place!

I really feel sorry for people who are facing a capital gains tax dilemma for the first time. With so much contradiction in articles, press releases and general information on the subject - how is a novice supposed to know truth from inaccuracy?

When doing research it's a good idea to write down anything you find that is puzzling or contradictory. The correct answer is easy to find if you know where to look and a good advisor can prove their responses without back peddling.

Paula Straub

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