Capital Gains Avoidance

[Teal Price]

What are some ways that I can avoid capital gains on some land that I want to sell?

[Michael Plaks]

Originally posted by @Teal Price:

What are some ways that I can avoid capital gains on some land that I want to sell?

The standard solution is to exchange the land for some other investment real property - anything from another land to residential or commercial rentals to a completely hands-off real estate investment. The technique is called a 1031 exchange or a like-kind exchange. Warning: you must start an exchange process before selling the property. After you sold it, it is too late. This forum features a few experts in 1031 exchanges, including @Dave Foster and @Bill Exeter.

Other solutions are more complex and not suitable in every situation:

• Monetized installment sales. A controversial technique that not everyone is comfortable with.
• Some trusts, such as charitable remainder trusts (CRTs). Works best if you also have charitable intentions.
• Private annuity trusts (PATs). Very complicated and expensive; only makes sense if the transaction is very large.
• Opportunity Zones (OZ). A brand new, highly promising, concept introduced by the Trump tax reform. Involves investing the profits into specially designated economic areas. Not much is known about it yet, we're in the uncharted territory, so proceed with caution.

So, 1031 exchanges are tried and reliable - just reach out to the people I mentioned, if they don't jump in here. Everything else - start with a consultation from one of real estate taxation experts. There're quite a few of us here on this forum.

Good luck!