Tuesday, August 25, 2009

When Does A Structured Sale Make Sense?

This is the last of the most common capital gains tax saving strategies. In the last several emails I have covered the SDIS, the Charitable Choices and the 1031 Exchange.

I am going to go out on a limb and make a bold statement about the Structured Sale. I do not see a benefit at all of doing this strategy over the Self Directed Installment Sale.

The SDIS actually is more flexible, returns a higher interest rate and saves much more in tax deferral over time. There is also less resistance from the buyer with the SDIS as they take title and do not have to assign the obligation to make their payments to the seller to an Assignment Company.

About the only plus is a lower initial set up cost and this in no way offsets the lost savings over time. Since the money goes into an immediate fixed annuity which is annuitized to make the installment payments, there are fixed annuities that give guaranteed returns that still return more to the seller over time.

I believe this is why these have not really caught on and other insurance companies have not jumped on the bandwagon to offer their own versions.

If anyone is convinced this is the best option for you, I’d love to hear your reasoning and we can still do a direct comparison. As long as you know the differences, no reason we can’t set one up.

If these reasons closely resemble your desires for the proceeds, or one of the previous options are more to your liking and you have a current sale pending, fill out the Confidential Questionnaire at www.savegainstax.com and I will contact you to discuss further.

Paula Straub