Minimizing the Taxes When Purchasing or Selling Commercial Real Estate
There are numerous ways to structure a real estate transaction to minimize tax liability. At The Law Offices of Hugh Janow, we analyze real estate transactions to determine the best strategy to obtain the maximum tax deductions on the purchase of real estate and minimize the taxes on the sale of the real estate.
Post-closing planning will never be as effective as pre-transaction planning. You need to speak to an attorney before you finalize your real estate deal. Our firm advises buyers, sellers, investors, developers, and property owners throughout New York, New Jersey and Connecticut about tax planning. Contact us to set up an appointment to learn more about real estate tax planning.
Here are some of the ways to structure real estate transactions to minimize tax liability for your real estate:
- 1031 Tax Deferred Exchanges: This is a method of structuring the sale of real estate to defer paying capital gains taxes on the appreciation of commercial and investment property. There are very specific rules that you and your lawyer need to comply with when trying to qualify a transaction as a 1031 tax deferred exchange.
- S Corporation Issues: An S corporation is not considered a separate entity for tax purposes. The shareholders are subject to tax liability on Subchapter S income. Other than for a built-in gains tax, the corporation is not taxed on capital gains. Shareholders can cause the S corporation to structure real estate transactions through a 1031 exchange or other tax deferral strategies.
- C Corporation Issues: A shareholder of a C corporation may face double liability on the sale of appreciated corporate assets for capital gains taxes. Double taxation occurs when, after selling the corporate real estate, the shareholders wish to liquidate the corporation and distribute the proceeds of sale to shareholders.
To learn more about structuring your real estate transaction in a way that minimizes tax liability, contact us at The Law Offices of Hugh Janow. We advise clients throughout New York, including clients in Nyack, Pearl River, Hudson Valley, and Rockland County.
