Tax Reduction: Selling Non-Real Estate Company & Buying REI?

[Aaron Motacek]

Hi everyone, tax question here.

I have a family friend who is selling their long-time business, resulting in a nice paycheck for them, but also missing out on a lot due to capital gains tax.  Obviously a 1031 exchange isn't an option here (not selling real estate), but is there a way to reduce their overall tax by purchasing real estate within the same year?

Thank you,

Aaron

[Ashish Acharya]

Originally posted by @Aaron Motacek:

Hi everyone, tax question here.

I have a family friend who is selling their long-time business, resulting in a nice paycheck for them, but also missing out on a lot due to capital gains tax.  Obviously a 1031 exchange isn't an option here (not selling real estate), but is there a way to reduce their overall tax by purchasing real estate within the same year?

Thank you,

Aaron

 Selling a business itself has many tax planning opportunities. Asset sale, interest sale, proceeds allocation, installment sale and many more. 

Buying any real estate will not be help them offset the gain. Meaning spending money on the real estate is not an automatic deduction on their income. 

Without being a real estate professional and without the cost segregation, I doubt they will have any significant tax deductions with any new real estate investing.