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Structured Sale: The state of the strategy… Aug. 2007
By mauch | August 20, 2007
It’s just over half way through the year and it is time for a quick update on the state of the Structured Sale in the marketplace so far in 2007.
The Structured Sale is still gaining in popularity and more and more sellers are beginning to inquire about the strategy.
So far, the large majority of sellers seeking out the benefits of the Structured Sale (capital gains deferral, guaranteed income stream, safety, etc.) tend to have the following characteristics.
- 50+ in age
- Selling appreciated real estate valued at about $500,000
- Have a capital gain of about $350,000
- Would like a guaranteed income to help during retirement
Of course, there are many other types of sellers who are seeking out the strategy such as active real estate investors who have found the strategy to be useful in tax planning, small business owners, owners of highly appreciated web domains, etc.
As of now, the Structured Sale can reach internal rates of return in excess of 5% with the right structuring. Keep in mind, these returns are pre-tax returns that enable the seller to earn a return on the capital gains tax funds that are in the annuity. When comparing the income stream that the Structured Sale generates versus selling for cash, paying the tax, and investing the funds elsewhere… a seller will usually need to earn an 8-11+% return to keep up with the income stream from the Structured Sale.
With real estate being a somewhat shaky investment in some areas, the Structured Sale offers the chance to exit the real estate market and earn a passive stream of guaranteed and hands off income without any headaches of managing tenants or worrying about the real estate markets.
Truly, the Structured Sale is still an extremely powerful and solid exit strategy for sellers who want a safe-secure stream of capital gains tax deferred income.
Topics: Tax deferral talk, Structured Sale |