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.

Some 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).

Go to the link below to look at a pdf I put together for you that will help guide you through the decision 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.

http://www.structuredsalespro.com/salesdiagram_2_.pdf

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.

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.

Bio:
Trevor Mauch has been in the real estate and finance industry for over 4 years and has fast become an expert on the new Ensured Installment Sale (Structured Sale) and capital gains tax deferment strategies. Trevor is the Vice President of the Settlement Professionals Inc. (http://www.structuredsalespro.com) capital gains division focusing on the Structured Sale (Ensured Installment Sale). Trevor works with the top business, tax, and real estate professionals in the nation and offers his clients best of the business service and knowledge about deferring capital gains tax through the Structured Sale.

Contact:
Trevor H. Mauch
Settlement Professionals Inc.
West Linn, Oregon
1-800-666-5584
http://www.structuredsalespro.com
http://www.settlepro.com