Pacific Specialty Financial

Case Studies:

Strategies

Cash parking strategy for real estate professionals

Simplify life exit strategy for seniors and estate planning

Strategy for distressed owners with gain to avoid foreclosure and to deter tax liability

Avoiding foreclosure and tax on gain

Facing Tax on Gain in Troubled Commercial, Multi-Tenant Properties or Pre-Foreclosure Situations?

The CPR Program will allow you to defer your gain and add basis for a fraction of the cost of the tax that would result from a traditional sale or exchange.

Example 1

An owner with a $40 million loan on property currently valued at only $20 million was considering options of:

Walking away and having a foreclosure on his financial history,
Continuing to feed the negative cash flow on the property but uncertain about:

How long before the value returns to equal the current loan.
How much the negative cash flow will be in the interim.

Paying capital gains tax of nearly $15 million on the gain in the property if foreclosed.

Our solution:

Despite the fact that the client had no access to financing because his credit had been ruined over the past 3 years, and had little capital, the CPR Program 90+% non-recourse 1031 exchange financing solution allowed the owner to:

Avoid a foreclosure being recorded against the borrower
Defer the $15 million tax liability on the gain.
Reduce the cost of the solution to only 10% of the $40 million (i.e. $4 million in cash) instead of $15 million.

Client Options:

Get foreclosure on record and pay $15 million in taxes that you don't have, or
Save your credit, avoid the tax, solve the problem with only $4 million out of pocket.