Capital gains tax calculator
By mauch | February 13, 2007
I just wanted to let you know that we just put up a capital gains tax calculator on our website. You can find the capital gains tax calculator at:
http://www.structuredsalespro.com/capital-gains-tax-calculator.html
Go check it out and tell us how you like it. We’ve had several visitors ask us about calculating capital gains so we decided to put up an easy to use calculator.
On another note… there have been a lot of people asking how to calculate the return on a Structured Sale (Ensured Installment Sale). It is extremely simple to do; however, it is unique to each situation.
Later this week I’ll show you examples of returns that can be expected and how it is calculated. If you have a specific situation that you would like for us to analyze, please give me a call at 1-800-666-5584.
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The Democrats and Capital Gains Tax
By mauch | February 1, 2007
One concern I have been hearing lately is about how the Democrats will hike the capital gains tax the first chance they get. Everyone knows that the nations defecit is growing and the current administration has rolled back taxes (including capital gains) in hopes of spurring growth in the economy.
Well, I can’t say if this strategy has worked or not, but there are some relative certainties with the future of the capital gains tax. I found a good article at CNNMoney.com that gives a bit of insight to what may happen in the next 3-5 years concerning the capital gains tax.
Bush signed off on the capital gains tax cut some years back and the cut isn’t set to expire until the end of 2010. There have been several attempts to raise the capital gains tax in recent years but the Bush administration has made it known that any attempt to do so will be vetoed so fast your head will spin. To throw a cog in the wheel, with the Democratic takeover of the house and congress it looks like they have a great chance for the White House in 2008. If the Democrats want push a bill through to raise capital gains after elections in 2008 they technically could. However, most political analysts predict that they will let the current legislation stay its course and expire in 2010.
So, this means that it is pretty certain that the long term capital gains tax rate for most of us will stick at 15% for another 4 years or so (including 2007). That is comforting, however, what happens for someone who chooses to defer capital gains tax now and realize a portion of their gain in 2011 and beyond?
According to the current capital gains tax legislation, the tax will go up to 20% after 2010. When considering how high capital gains have been in the past (an average of over 25% as late as 1996), 20% is still nothing to be overly concerned about for sellers looking to defer their tax.
So, if you are contemplating taking your capital gain now rather than deferring and paying a slightly higher capital gain tax after 2010, you should sit down and crunch some numbers to see which way makes more sense. Remember to figure in the return you will earn on both your principal and deferred tax in your calculation. Entering the return you will earn on the deferred tax (and the high liklihood that you will be in a lower tax bracket if you defer) into the equation may show you that it is smarter to defer tax rather than take the entire hit now.
Be sure to perform your own calculations to see exactly what is best for you. If you would like, email me @ mauch@structuredsalespro.com and I will help you perform the calculations and show you which way is in your best interest.
Until next time…
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Clearing up a bit of confusion with the Structured Sale
By mauch | January 26, 2007
I recently came across a company who offers capital gains tax deferral strategies to sellers of appreciated assets. This particular company used to offer the now defunct Private Annuity Trust and is offering something else instead. (You will find their google ads and websites all over the net… you have probably seen them before but I choose not to mention names because that is not my style)
Anyhow, I signed up for their “Free Report” and have been receiving their “educational” email over the past week or two. In the latest email she describes the Structured Sale, but I noticed that there are a few pretty big errors that need clearing up so you know the truth about the Structured Sale.
The first error she states:
“…the only Assignment Companies offering structured sales are owned by large insurance companies.”
I know, this is splitting hairs, but the statement is wrong. The Assignment Companies are not “owned” by any insurance companies. They are instead their own stand alone company with their own management and board of directors. These assignment companies were, however, originally formed by the insurance companies and have a strong affiliation to them. So…I know this detail is minute, but I wanted to clear it up.
Another big detail that is misrepresented in her email series is:
…”whenever you pass away whatever money had not been paid out to you is kept by the insurance carrier.”
This statement is somewhat misleading. The fact of the Structured Sale is that it can be passed on to your spouse, heirs, estate, etc. upon the death of the beneficiary. In the paperwork that we prepare, we map out exactly what you would like done with the remaining payments if you should die before all payments are received. The remaining payments will then be made to whom you choose and your heirs and estate will not miss out on the equity due to you in the Structured Sale.
Don’t get me wrong, there are annuity products that do only pay out until the beneficiary dies. However, the Structured Sale can be structured so the remaining payments can be passed on.
I don’t mean for this post to be discrediting the writer of the email series or her company. I just wanted to clear up some facts she had wrong so you can make a truly informed decision on the deferral of your capital gains tax.
Until next time…
Topics: Tax deferral talk, Structured Sale | No Comments »
Are there any additional expenses in using an Ensured Installment Sale (Structured Sale)?
By meligan | January 23, 2007
Probably no more so than a regular installment sale, or any other type of real estate sale transaction. The main expenses remain brokerage commissions and fees, and legal advice and accounting. SPI is paid solely by the insurance company chosen to provide the placement of the annuity contract. And those fees are already factored in to any proposal or illustration you receive from us.
If you decide that this strategy is not for you, there is no bill for just talking to us or having us work up some illustrations for you. We are happy to help you explore whether this strategy makes sense for YOU.
Topics: Structured Sale | No Comments »
Part 2: The Decision Process - Is the Structured Sale Right For You?
By mauch | January 20, 2007
Here’s part 2. So, you have decided that you are selling your business or real estate. It is now time to decide which sales and tax deferral method you should use to maximize your benefits and minimize your capital gains taxes.
Let’s go over some of the more popular sales methods out there.
- All cash sale - This is pretty self explanatory. You sell for all cash to a buyer who either has financing or cash to bring to the deal. You will be hit with capital gains tax in the year of the sale; however, you will have all of your money right now (minus your 15% capital gains of course). Costs the seller no extra cash to use.
- 1031 Exchange - This method is very popular and an excellent tax deferral and wealth building tool. Here are the cliff notes if you don’t know how a 1031 works. You sell your investment property and place the proceeds in an escrow account until you find a “like-kind” investment property to roll the cash into. However, there are several restrictions such as time that you must follow or your capital gains tax deferral is null. The 1031 is excellent for those who want to immediately roll their equity into a new property and you don’t pay capital gains until you ultimately sell and realize the gain. It often costs the seller a fee to pay for the facilitation of the 1031 exchange.
- Installment Sale - With an installment sale you sell your property or business and take your payments over a period of years. The seller may or may not take a down payment (which is taxable when received) and the rest of the balance is due by way of agreed upon payments spread out over a period of years. Payments are not taxed until received, which means capital gains tax deferral for the seller. However, the seller relies on the creditworthiness of the buyer and his/her business or property management skills. The seller is at a higher level of risk. Usually costs the seller nothing extra other than the drawing of a sales contract if one is needed.
- Charitable Remainder Trust - In basic terms, a Charitable Remainder Trust is a tax deferral tool that allows the seller to give to their favorite charity and still receive income from their gain. With this sales method, a trust is set up which receives the proceeds from the sale. While in this trust, the proceeds earn a return which can be paid to the seller. The trust is designed to give the remaining balance to the designated charity upon the death of the seller. Prior to the death of the seller, the seller can collect monthly/yearly payments which avoid capital gains tax because they are not considered part of the “capital gain”. The capital gain is still in the trust, the seller usually only collects the interest earned by the capital while invested in the trust. The key to the Charitable Remainder Trust is that the charity shall receive the money eventually or capital gains tax will be realized. So, the seller technically isn’t entitled to the equity in the trust, merely any income realized by it. Will cost the seller sometimes significant fees to use because of the involvement of an attorney and/or other professional fees.
- Structured Sale - As you know, the Structured Sale combines the best of an annuity and an installment sale. It takes the tax deferral, income stream, rate of return, and payment flexibility of an installment sale —- and —- combines it with an annuities safety, guaranteed payments, leverage capability, flexibility, rate of return, and other benefits to make it a powerful sales tool. The Structured Sale costs the seller nothing at all to use over and above the normal selling fees. We (the certified structured annuity broker) are paid by the life insurance company, which has no effect whatsoever on the pocketbook of the seller, buyer, agent, or other professional.
I know I flew through those sales and tax deferral methods, but I gave you enough to get started. If you are considering selling your business or real estate I urge you to do your own research and decide which method is right for you.
You can see how powerful the Structured Sale is when used in the right situation. So, in your search for the “perfect” sales and tax deferral method, keep the Structured Sale (Ensured Installment Sale as we call it) in the front of your mind.
If you have any questions about the Structured Sale or the other capital gains tax deferral methods mentioned above, don’t hesitate to shoot me an email or give me a call.
1-800-666-5584
Until next time..
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The decision process: Choosing your sales method - Is the Structured Sale right for you?
By mauch | January 17, 2007
Just like any big decision in your life, choosing how you sell your business or real estate should be a well thought out process. Afterall, most of your retirement may be wrapped up in your business or investment property. So, how do you decide which sales method is the best choice for you?
First off, you need to determine what your goals are with the sale of your appreciated asset.
- Are you selling so you have cash to place in a new investment?
- Are you selling because you want to retire and will use the sales proceeds to help fund retirement?
- Are you selling so you can “trade up” and roll your equity into another investment property?
- Are you selling to pay off a debt?
- Are you selling because you inherited a business/property and have no desire to run it yourself?
- Are you selling because you don’t want the hassle of managing a rental property or business but want to continue having monthly cashflow?
- Etc……. you get the point..
You need to really decide why you are selling and what you plan on doing with your equity. Once you decide this it is time to begin looking at your options.
The Options
As you already know, there are as many sales options as there are sellers. However, I will go over the most popular and widely used. Go down the list of criteria and note the ones that fit your goals.
I want:
- Tax reduction and deferral
- Cash up front
- Monthly payments of my equity
- Yearly payments of my equity
- To acquire new investment property
- To consider carrying a 2nd note for part of your equity
- Etc. (Write down all of the criteria that you want to meet)
The list above is a small list of criteria, but it helps get you started.
Now, take a look at your options. Popular options are: all cash sale, installment sale, 1031 exchange, charitable remainder trust, and the Structured Sale (Ensured Installment Sale).
Click the link below to look at a pdf I put together for you that will help guide you through the process. The pdf doesn’t go over the charitable remainder trust; however, I will go over what it is in “The Decision Process” part 2 later this week.
Structured Sale Decision Process
Print off the diagram and write down your notes on that page. Write down what you like and dislike about each sales method and circle the method that looks like it works the best for you. If you do not like any of the options on the diagram check back here later this week for part 2 where we describe the options more in-depth.
On another note. Be sure to fully research any sales method you use. Do not only rely strictly on the advice that you receive from someone such as your CPA, Financial Planner, etc. because they may or may not be up to snuff on the newest sales and tax deferral techniques. If your advisor hasn’t yet heard of the Structured Sale please point them to www.structuredsalespro.com so they can learn more about it and advise you accordingly.
In part 2 of “The Decision Process” I will describe the sales methods more in-depth and point you to other excellent resources. Part 2 should be out later this week.
Until next time…
Topics: Structured Sale | No Comments »
2007…the year of the Structured Sale?
By mauch | January 12, 2007
Will 2007 be the year of the Structured Sale? It’s hard to tell, but I do think that it will become an increasingly popular capital gains tax deferral tool.
2007 may be the year that the Structured Sale breaks out of the “its too new” syndrome and into the more mainstream consciousness of financial and real estate professionals nationwide. Just in the last 2 months the internet craze (well…I guess I wouldn’t quite call it a craze) for the term “Structured Sale” has taken hold.
As late as October of 2006 you could type in “Structured Sale” or “Structured Sales” and get a bunch of results that had nothing to do with capital gains at all. Now… the first few pages are filled with the structured annuity heavy hitters websites.
More and more people are searching specifically for the term “Structured Sale”, which tells me that word is getting out and people are realizing how great of a sales method it is.
I’m excited for 2007 and look forward to seeing the Structured Sale become the sought after tax deferral method for our niche of appreciated asset seller.
See you next time!
Topics: Structured Sale, Random | No Comments »
Welcome to our blog!
By mauch | January 11, 2007
As you may have seen lately Settlement Professionals Inc. has been doing some changes with our online presence. We just updated our main site: www.settlepro.com to better reflect our position in the structured settlement industry as the nations top Plaintiff Only Settlement Planner. Take a look at it and let me know what you think.
Also, we just launched our Ensured Installment Sale (our name for the Structured Sale) website and are already seeing great results. We are still tweaking it a bit, but it is up and running.
And last but not least, we just added our Structured Sale blog where you will find the most up to date information on the Structured Sale and tax deferral strategies. We will try to post in it as often as possible, hopefully every other day at least, but you know how that goes.
Anyway, check back here often and learn about the Structured Sale, its progress in the industry, our innovations, my random ramblings, and anything else we want to post.
We are working on some pretty exciting projects with the Structured Sale and will write about them when the time comes.
For all of us here at Settlement Professionals Inc., we look forward to being your source for Structured Sale info and are excited to see what the Structured Sale can do!
See you next time!
Topics: Random | No Comments »
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