I'm very excited today as the "Interview with the Pros" series is getting national attention.
Here's a link to just one news site announcing the launch.
Site name: Ventura County Star - CA News
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=VENCTYCA.story&STORY=/www/story/03-14-2006/0004319685&EDATE=Mar+14,+2006
This is the first big step in letting people know they may have some great options when selling their capital assets.
I'm hoping the next few blog posts will detail some interesting responses regarding situations that benefit.
Paula Straub
askpaula@savegainstax.com
Tuesday, March 14, 2006
Tuesday, March 07, 2006
Interview with the Pros revamped
The latest and greatest Interview with the Pros series is now online.
The Qualified Intermediary segment has been revamped with Stephen Wayner from Bayview Financial Exchange Services. Stephen is a renowned expert on 1031 Exchanges and is regularly quoted in major publications.
This collection of information will save tons of time when considering a capital gains saving option. The pros reveal what you need to determine which choice is best.
Go right now to the main site and click under the "Interview with the Pros" box.
Whether you are in escrow or planning ahead for your future, you need to know how others are hanging onto their money.
Paula Straub
askpaula@savegainstax.com
The Qualified Intermediary segment has been revamped with Stephen Wayner from Bayview Financial Exchange Services. Stephen is a renowned expert on 1031 Exchanges and is regularly quoted in major publications.
This collection of information will save tons of time when considering a capital gains saving option. The pros reveal what you need to determine which choice is best.
Go right now to the main site and click under the "Interview with the Pros" box.
Whether you are in escrow or planning ahead for your future, you need to know how others are hanging onto their money.
Paula Straub
askpaula@savegainstax.com
Tuesday, February 28, 2006
Partnerships Gone Bad
I have a client that has been through the ringer with his business partner.
Many years ago my client formed a partnership with an individual who formed his small corporation which became the partner. They purchased some commercial property and proceeded to manage it for many years together. Over the years the relationship became very strained and sometimes downright contentious. They had some financial difficulties.
Then came the time to sell the property. This brought on even more headaches and miscommunication.
The point of the story is, my client wished to hang onto as much of his profit as possible and minimize his capital gains tax hit. To do this required some cooperation from his partner. The partner will receive no less a share of the proceeds in agreeing to amend the partnership agreement, but will not cooperate out of sheer bad will. It is an ongoing battle to settle the matter and just get out. It has taken a major toll.
Exit strategies are rarely considered when beginning a business or partnership. However, it is beneficial to plan for all contingencies and to keep excellent documentation of all transactions and agreements.
Make sure if there is a partnership or corporation, that it can be dissolved in a manner agreeable to all ahead of time. It's never too early to plan for the future. It could mean the difference of a great deal of money that could be working for you in retirement, vs being paid out with no other options.
Make sure you have good legal counsel along the way. They must also have copies of all agreements and tax returns. If you don't have all your records, the burden of proof may be too difficult to resolve.
Paula Straub
askpaula@savegainstax.com
Many years ago my client formed a partnership with an individual who formed his small corporation which became the partner. They purchased some commercial property and proceeded to manage it for many years together. Over the years the relationship became very strained and sometimes downright contentious. They had some financial difficulties.
Then came the time to sell the property. This brought on even more headaches and miscommunication.
The point of the story is, my client wished to hang onto as much of his profit as possible and minimize his capital gains tax hit. To do this required some cooperation from his partner. The partner will receive no less a share of the proceeds in agreeing to amend the partnership agreement, but will not cooperate out of sheer bad will. It is an ongoing battle to settle the matter and just get out. It has taken a major toll.
Exit strategies are rarely considered when beginning a business or partnership. However, it is beneficial to plan for all contingencies and to keep excellent documentation of all transactions and agreements.
Make sure if there is a partnership or corporation, that it can be dissolved in a manner agreeable to all ahead of time. It's never too early to plan for the future. It could mean the difference of a great deal of money that could be working for you in retirement, vs being paid out with no other options.
Make sure you have good legal counsel along the way. They must also have copies of all agreements and tax returns. If you don't have all your records, the burden of proof may be too difficult to resolve.
Paula Straub
askpaula@savegainstax.com
Wednesday, February 22, 2006
The resale market for Tenant in Common Properties
I constantly get asked "What is the market for reselling a Tenant in Common interest?"
As with most things, it depends.
If you exchange into a tenant in common property, say a large office building, you will own a deeded fraction of that building. You can sell it at any time, assuming of course you can find a buyer.
Since this type of exchange was only sanctioned by the IRS in 2002, the resale market has not been tested to any great degree to date. It is a 5 billion dollar industry, so a lot of people have chosen to go this route to defer capital gains tax and receive an income on their equity.
Common sense rules of real estate still apply. If you have made a good selection of your TIC and the management company is doing a good job, your investment remains an attractive option for another exchange. There are often more exchangers than good properties these days. Wouldn't you want someone else's TIC share if it was performing well?
On the flip side, if you don't do your due diligence, go with a reputable company, choose a management company with a great track record, or buy into a property where the assumptions made by the sellers don't stand up over the long run, you may have a hard time convincing someone else to buy your share.
It's just like any real estate transaction. If the property is bought at a reasonable price, is in a good location, has good management and good long term tenants, it remains an attractive investment. Over the long term, like most good real estate, it will appreciate in value. If the property was overpriced, is poorly run, not in a great location, and has tenants that wreck the place and don't pay their rent, it becomes unattractive to someone looking to buy.
The moral of the story is, do your homework. Hire someone to help you make a good decision and point out the pros and cons. Work with reputable companies who know their business. These concepts apply across the board to all investments.
There are always buyers for good real estate. It's the not so great properties in not so great locations that will have a hard time reselling.
Paula Straub
askpaula@savegainstax.com
As with most things, it depends.
If you exchange into a tenant in common property, say a large office building, you will own a deeded fraction of that building. You can sell it at any time, assuming of course you can find a buyer.
Since this type of exchange was only sanctioned by the IRS in 2002, the resale market has not been tested to any great degree to date. It is a 5 billion dollar industry, so a lot of people have chosen to go this route to defer capital gains tax and receive an income on their equity.
Common sense rules of real estate still apply. If you have made a good selection of your TIC and the management company is doing a good job, your investment remains an attractive option for another exchange. There are often more exchangers than good properties these days. Wouldn't you want someone else's TIC share if it was performing well?
On the flip side, if you don't do your due diligence, go with a reputable company, choose a management company with a great track record, or buy into a property where the assumptions made by the sellers don't stand up over the long run, you may have a hard time convincing someone else to buy your share.
It's just like any real estate transaction. If the property is bought at a reasonable price, is in a good location, has good management and good long term tenants, it remains an attractive investment. Over the long term, like most good real estate, it will appreciate in value. If the property was overpriced, is poorly run, not in a great location, and has tenants that wreck the place and don't pay their rent, it becomes unattractive to someone looking to buy.
The moral of the story is, do your homework. Hire someone to help you make a good decision and point out the pros and cons. Work with reputable companies who know their business. These concepts apply across the board to all investments.
There are always buyers for good real estate. It's the not so great properties in not so great locations that will have a hard time reselling.
Paula Straub
askpaula@savegainstax.com
Thursday, February 16, 2006
When a Private Annuity Trust makes sense for your Primary Residence
You bought a home 10 years ago for 200K. With the recent appreciation of real estate in many states your home is now worth 1 million dollars. Sounds too good to be true? Welcome to California.
Now you have a million dollar residence, but if you sell, even if you're married and qualify for a 500K personal exclusion, you will still owe capital gains tax on 300K dollars. It's not unlikely that in Califoria that would amount to about 70K.
Let's say you are retired. How long would it take you to replace 70K in savings? Or, what if your spouse passed away a couple of years ago? Now you only have a 250K exclusion. So, you owe capital gains tax on 550K. That may be 126K out the door. That hurts.
A private annuity trust may help take the sting out of that tax bill. If a trust is created and the trust sells your home, you can spread out that 70K or 126K tax obligation out over the rest of your life. That means that money is working for you to make more money instead of passing directly to Uncle Sam in one huge lump sum.
In return, you begin receiving monthly payments. You have the option to use those payments to pay for a new mortgage on another residence, or on rent on someone else's investment. No more property taxes, repairs, insurance, etc. You have the proceeds to supplement your pension, social security, or other retirement plan.
It may or may not be the best solution in your particular situation, but wouldn't it be worth looking into before writing that 70K or 126K check? You decide.
Paula Straub
askpaula@savegainstax.com
Now you have a million dollar residence, but if you sell, even if you're married and qualify for a 500K personal exclusion, you will still owe capital gains tax on 300K dollars. It's not unlikely that in Califoria that would amount to about 70K.
Let's say you are retired. How long would it take you to replace 70K in savings? Or, what if your spouse passed away a couple of years ago? Now you only have a 250K exclusion. So, you owe capital gains tax on 550K. That may be 126K out the door. That hurts.
A private annuity trust may help take the sting out of that tax bill. If a trust is created and the trust sells your home, you can spread out that 70K or 126K tax obligation out over the rest of your life. That means that money is working for you to make more money instead of passing directly to Uncle Sam in one huge lump sum.
In return, you begin receiving monthly payments. You have the option to use those payments to pay for a new mortgage on another residence, or on rent on someone else's investment. No more property taxes, repairs, insurance, etc. You have the proceeds to supplement your pension, social security, or other retirement plan.
It may or may not be the best solution in your particular situation, but wouldn't it be worth looking into before writing that 70K or 126K check? You decide.
Paula Straub
askpaula@savegainstax.com
Tuesday, February 07, 2006
Why knowing your Capital Gains Saving Options is Important
Did you ever go into a store looking for a new computer, get drawn in by a salesman and come out with a combination of equipment that you have no idea how to work or even if you needed the bells and whistles you paid for?
You probably listened to the guy spout off terms you'd never heard of, and didn't even know what questions were appropriate to ask- because, let's face it, you want the thing to work when you plug it in, not conk out when you really need it, and not require umpteen calls to technical support where you're on hold longer than you talk to a live person. Then the person is probably from an overseas country where labor is cheaper and they don't always have a great command of the English language or the ability to solve your problem.
You wonder if you paid too much, got what you were promised, made the right choice, and might have gotten a better price if you'd only waited another week or month for the prices to drop. I've been right there with you.
I know it's the same iffy feeling for some of my clients when they first approach me to see if they have an option to hold onto their capital gains. They have to start somewhere, but how do they know they've come to the right place?
This is an honest query, because when you are not familiar with new, often complex concepts, it's difficult to know if you're being given the straight story.
This is the perfect case where building a good, solid rapport and first offering education without requiring any commitment is the only way to go.
My weekly teleclasses give callers the chance to listen to capital gains saving concepts presented as an overview. Although examples are given for illustrative purposes, no specific advice is given. First, you must be made aware of what strategies exist.
The "Interview with the Pros" package provides a comprehensive introduction to the different types of specialists you may need to guide you to the best decision. With this knowledge you can choose a competent professional to assist you in making the correct choice for your unique situation. If you feel comfortable with the individuals in the series, you can employ them to work for you as well.
The whole thing keeps coming back to the same principles.
1. Educate yourself on the options available to you.
2. Give yourself time to plan and get comfortable with your decision.
3. Choose competent professionals with your best interest at heart
4. Take appropriate action when it can make a huge difference in your financial future. Don't wait until your choices are taken away from you. It is up to you to safeguard your financial future, as well as that of those you care for.
Paula Straub
askpaula@savegainstax.com
You probably listened to the guy spout off terms you'd never heard of, and didn't even know what questions were appropriate to ask- because, let's face it, you want the thing to work when you plug it in, not conk out when you really need it, and not require umpteen calls to technical support where you're on hold longer than you talk to a live person. Then the person is probably from an overseas country where labor is cheaper and they don't always have a great command of the English language or the ability to solve your problem.
You wonder if you paid too much, got what you were promised, made the right choice, and might have gotten a better price if you'd only waited another week or month for the prices to drop. I've been right there with you.
I know it's the same iffy feeling for some of my clients when they first approach me to see if they have an option to hold onto their capital gains. They have to start somewhere, but how do they know they've come to the right place?
This is an honest query, because when you are not familiar with new, often complex concepts, it's difficult to know if you're being given the straight story.
This is the perfect case where building a good, solid rapport and first offering education without requiring any commitment is the only way to go.
My weekly teleclasses give callers the chance to listen to capital gains saving concepts presented as an overview. Although examples are given for illustrative purposes, no specific advice is given. First, you must be made aware of what strategies exist.
The "Interview with the Pros" package provides a comprehensive introduction to the different types of specialists you may need to guide you to the best decision. With this knowledge you can choose a competent professional to assist you in making the correct choice for your unique situation. If you feel comfortable with the individuals in the series, you can employ them to work for you as well.
The whole thing keeps coming back to the same principles.
1. Educate yourself on the options available to you.
2. Give yourself time to plan and get comfortable with your decision.
3. Choose competent professionals with your best interest at heart
4. Take appropriate action when it can make a huge difference in your financial future. Don't wait until your choices are taken away from you. It is up to you to safeguard your financial future, as well as that of those you care for.
Paula Straub
askpaula@savegainstax.com
Tuesday, January 31, 2006
Private Annuity Trusts for Stock Sales
It's curious when certain types of potential clients have similar situations at similar times. This must be the time for stock buy-backs.
Sometimes when someone works for a startup company, they receive stock options or even shares of company stock at very low or no cost. This is an incentive to hang in there with the new company until it becomes successful and goes public. It often takes the place of a large salary or benefit package.
Some companies fail and others explode. Who wouldn't have wanted to be there at the beginning of Google, Microsoft or Walmart?
There may come a time when the company is bought out, or a time when the company has an option to buy back your shares at a certain price. Whatever the reason, this leaves you with a "good" problem. You get a windfall in a lump sum.
You have no or little basis and now the purchase price may be significant. Let's just say your purchase price was 1K and the company is buying them back for 250K. You have a capital gains tax obligation on 249K. This may be between 15%-30%. That's a lot of dollars to part with. At 23%, that's $57,270.00. If this is part of your retirement package, you might want to look into a tax saving strategy.
A private annuity trust may be a good option. The trust is created, the shares are transferred to the trust and the trust will receive the cash. That 250K is now working for you and the 57+K can be deferred or spread out over the rest of your life and paid in small chunks. You receive a lifetime income that you can depend on- similar to a pension plan or social security.
If you're lucky enough to have this "problem", make sure you check out all of your options. Keep as much of those gains as possible working for you.
Paula Straub
askpaula@savegainstax.com
Sometimes when someone works for a startup company, they receive stock options or even shares of company stock at very low or no cost. This is an incentive to hang in there with the new company until it becomes successful and goes public. It often takes the place of a large salary or benefit package.
Some companies fail and others explode. Who wouldn't have wanted to be there at the beginning of Google, Microsoft or Walmart?
There may come a time when the company is bought out, or a time when the company has an option to buy back your shares at a certain price. Whatever the reason, this leaves you with a "good" problem. You get a windfall in a lump sum.
You have no or little basis and now the purchase price may be significant. Let's just say your purchase price was 1K and the company is buying them back for 250K. You have a capital gains tax obligation on 249K. This may be between 15%-30%. That's a lot of dollars to part with. At 23%, that's $57,270.00. If this is part of your retirement package, you might want to look into a tax saving strategy.
A private annuity trust may be a good option. The trust is created, the shares are transferred to the trust and the trust will receive the cash. That 250K is now working for you and the 57+K can be deferred or spread out over the rest of your life and paid in small chunks. You receive a lifetime income that you can depend on- similar to a pension plan or social security.
If you're lucky enough to have this "problem", make sure you check out all of your options. Keep as much of those gains as possible working for you.
Paula Straub
askpaula@savegainstax.com
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