Losing a Potential Deal - Seller Worried About Capital Gains Tax

[Justin Lenk]

I have a deal that I've been working with the sellers on and their accountant just informed them on the capital gains tax since the rental is in their parents living trust, they said they are no longer interested and will wait until their parents pass before selling to avoid capital gains tax. Is there a way around this? Or a strategy to get them back onboard? This is in Frederick county, MD.

[Linda Weygant]

If you structured this as a sale where the owner carries the note, they could stretch the capital gains taxes out over the period of the note.  But it doesn't avoid the tax, it just makes it more manageable.

They could also do a 1031 exchange which would defer the taxes off into their next investment property.