Not a 1031 - even better - Posted by John Behle
Posted by John Behle on April 29, 1999 at 24:13:59:
Property can not be traded for paper. Yet, property can be sold on an installment to create paper with good tax consequences. You can also trade the property for another that you sell to create paper.
The simplest option can be just to take an equity line of credit against the 100k equity to buy paper with. It can also be used to buy and turn quick deals or turn REO’s or pre-foreclosures into paper.
A very powerful approach - the one I would use in your situation would be to use a charitable trust (not the same as a Pac-Trust). Appreciated property that would have a tax problem if sold can be donated to the trust. You receive a deduction instead of a tax bill. You receive income for life and then the property goes to a qualified charity at death (you can arrange to skip a generation also). Sounds like you’ve given up some big assets in exchange for the deduction. It would be - unless you couple it with an insurance policy covering the appreciate value of the assets.
Once the property is in the trust, it can be held for income or can be sold tax free and the proceeds can be invested in other income producing assets like paper.
Tax deduction, income for life, give the property away to a good charity and still pass the value on to posterity.
One associate of mine does a lot with “homes for the homeless” and other similar charities. Another works with Universities and churches. People give heavily to charities even though it is costly for them. Imagine the heightened response if it actually puts them ahead while helping the charity too.
We’re going as far right now as setting up a qualified charity to further enhance the deals. Our charity is focused on a training program for troubled teens. We’ve been proving the program for many years and are now set to expand to a larger scale and get some cooperation from the school system.