Senior citizen wanting to exit income property
Concerned about re-financing current property in the next few years?
Avoiding foreclosure and tax on gain
Exit strategy for ranchers, farmers and landowners for estate planning
Business owner selling business but debating about selling land and building with business
Facing tax on phantom income from principal paydown?
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
This current low interest rate environment is an ideal time to re-finance for rapid principal amortization but results in tax on the phantom income. What is the solution to the taxes on the phantom income?
Example 1:
A client with considerable equity in property wanted to take advantage of current low interest rates to refinance the property for an accelerated principal amortization. The problem was that by accelerating the pay down of $5 million of principal over 5 years, it would trigger taxes on the $5 million of phantom income. This would result in approximately $2 million in taxes.
CPR Financing solution
For a fraction of the cost of the tax bill, we were able to create offsetting deductions to eliminate the tax on the amortization.
The result was to eliminate the $2 million in taxes over the next 5 years and use the tax savings to purchase other property that has non-recourse financing, virtually no financial underwriting requirements, and requires no management or oversight.