Oops, here comes a rainy day and you need cash? You find a better location for your business or you are doing very well and need a bigger space for your growing business?
Well, whatever reason people might have to sell their properties, there is one thing that everyone would be concerned about—how much tax you will pay for it!
There are many ways to deduct taxes from your bill, which a professional tax consultant may help you with. From the point of the real estate business, there is one thing you could do to avoid big taxes from selling your investment properties—utilizing the Tax Deferred Exchange.
Tax deferred exchange does well to help sellers with relocating or trading purpose. An example would be, Dawn sells her apartment building to Peter for $600,000 and Peter sells his to Dawn for $850,000. If Dawn’s mortgage debt is $200,000 and Peter’s is $400,000. The figures are:
Dawn’s equity is $400k, and Peter’s equity is $450k. So Peter would require an additional amount of $50k from Dawn for the transaction. This $50k is called recognized gain and Peter would only pay taxes on this amount of money. If Dawn and Peter have the same equity, no money changes hands. So there is no actual cash paid, and thus no tax.
If you think this is helpful, please follow us on Twitter and Facebook to find out more information. And also, feel free to go to our website and call our professional agents if you are interested in buying or selling your properties.
Our experienced commercial agents are ready to take on your questions and help you find the right property for your business, investment, etc. Look into properties represented by our commercial agents by going to www.abgcommercial.com.
ABG Commercial – Associated Brokerage Group | 307 Cambridge St. Cambridge, MA 02141 | 617.492.9900