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Updated over 4 years ago,
Distributing property to save on TAXES
Hi all
I am purchasing a property that is not worth much, but I will be pouring a ton of sweat equity and CASH for the next few years. I will own it free and clear now, and when it is done with rehab. Current value at 80k and in a few years it will be 4+ million.
We own this investment as a family, and will be putting our own funds into it, I have done extensive research into it's current valuation and how much it WILL be valued, I am a GC so I know how to get it to the price I stated above.
However, we are not looking to sell and will keep it as a cash cow. I need help with a TAX strategy. Currently I can sell it or gift it or a % of LLC to whomever to decrease the tax burden of receiving cash flow to only me (maybe spread amongst all of us) and when eventually selling we would all get smaller amounts aka less tax burden.
Since we are a family company I can make my Father the sole owner of the property or myself, or a split between all of us siblings included. That would be easy to do now with small tax consequences but later when its worth millions it will cost a lot.
I want to know if I should gift the property to my Father and we all can share the income after she has paid taxes on it (from the company of course not his money) or if I should split the property between many of us now since it will be split when sold 10 years from now or longer to avoid taxes.
Or is it better if my Father owns it until we inherit it on a "stepped-up" basis. I am assuming that would mean if we sold at 4.5 million and he owned it since it was 80k-4mil we would inherit it and sell it and only pay taxes on the 500k gains from 4 million?
Either way please recommend me some good CPA s and tax strategists I would like to get to know some.
This is multifamily Real Estate.