Case Studies

Problem

A retired real estate investor was troubled about his portfolio that included a rental property in Massachusetts. The multifamily property was valued at over $700,000. He wanted to sell the property, replace the income provided by his rental, and reduce his income taxes. He was stunned to learn that, according to his lawyer and a tax preparer, he would be obligated to pay nearly $200,000 in capital gains taxes if the property was sold and that little, if anything, could be done to lower his income taxes.

Tax Wealth Network Solution

Using our Tax Clarity Tax Planning Module, we completed a *Pre-Sale Tax & Income Analysis* before the property went into escrow and was sold. While he was aware of a 1031 Exchange, the client didn’t want to simply replace property and continue dealing with day-to-day maintenance and operations. 

Our diagnosis reported an alternative to a 1031 that structured the sale through an IRS-sanctioned installment method that would result in no immediate realization of capital gains when the property was sold. This provided the investor with $200,000 more to invest now in a mix of higher-yielding opportunities, which helped him to replace his income from the sold property. We also discovered other tax-saving estate planning opportunities for him with which his lawyer and most CPAs were unfamiliar.