Posted by Bill Gatten on January 31, 2000 at 18:44:27:
If you can truly use the tax benefits, and can’t sell them for more than they’re worth to you, then you should keep them.
Many of us, however, are not able to use them (too much income or not enough, or too many income properties): others of us sit down and calculate the true cash value of our active tax deductions–whether we can use them or not–then decide whether we should keep them or sell them to someone else for more than they may be worth to us…in order not to have ANY costs and physical obligations associated with the properties we own.
If one’s tax position is such that he/she’d be better off with management and maintenance costs, and less money coming in every month, then they don’t need a device that allows them to pass tax benefits (much less homeownership benefits) to another.
In my own case, I just want armchair investments without any work: and I’ve found that the best way to do that is to make all my tenants partners in my investments. It doesn’t cost me anything and the trust keeps them completely separated from me. And like I said: anything given up in future appreciation potential is going to be more than made-up for in increased cash-flow and freedom from the negatives of rental property ownership. And, too, there may be no appreciation to share in the end. And were that to happen…well, I got mine anyway by having charged a lot more per month, and having avoided all costs of management, maintenance, vacancies and negative cash-flow. And in the no-appreciation scenario, the tenant comes out better too?they’d have lost a lot more if they’d bought the house with standard loan qualifying and a full down payment, or if they’d been renting with a tax drain all that time.
Mark, I’m not the be-all and end-all to every creative financing need out there. But I do see many transactions happening or about to happen here on CRE that could be bolstered and secured and shielded by the PACTrust mechanism. It’s worked for me and a few thousand of our clients for several years now…and seems to just keep on getting better and better.
Most importantly though, remember what Henny Yongman said: "If it hurts when you go like that, well…?