Looking for creative, LEGAL, tax avoidance ideas

[Mindy Jensen]

I may have the opportunity to purchase a 4-plex in my desired area. When I spoke to the owner on the phone, she expressed a desire to avoid capital gains taxes.

She has owned this place since 1975, when she paid $67,000 for it. I can see it selling easily for $500,000. That is a lot of capital gains taxes to pay.

She is an older woman who owns two 4-plexes in my area, which is ultra super red-hot. I think she wants to get rid of the second 4-plex and just own the one she lives in.

I know a bit about 1031 exchanges, but I don't think this is the route she wants to go.

I am going to offer a land contract, with two payments, December 31 and January 1, to spread out the tax obligations over two years, but thought I would pose the question to the you and see if there are any other ideas. 

This transaction would take place in Colorado.

Thanks!

[Steve Babiak]

Look up installment sales. The gains can be spread over time so that the tax burden isn't as painful all at once. The two payments you are proposing will still hit hard on taxes due.   Many more installment payments over many more years is the approach you should look at.