• Ross Kline, CWMS®

Case Study: The $285,840 Tax Bill


A real estate investor couple moving to Kentucky to retire was planning to sell their properties and buy new ones closer to their new home. They'd been trying to find replacements in the area, but options are slim and ROI is tight due to the real estate boom. They're also older, so they'd been on the fence about staying in real estate anyway, since the hassle of management is getting tiresome.


They ultimately decided to simply sell the properties and invest in fully passive assets, so they can focus on traveling and spending time with family.


When they talked with their tax advisor, they discovered that by depreciating the properties over the years, they now have a $1.2m capital gain built up... which means a $285,840 tax bill (Federal & State) when they sell!! OUCH!


Fortunately, they talked to me!


There is an IRS program designed to attract investment from wealthy individuals that [when done properly] can reduce or even eliminate capital gains taxes.


By implementing the strategy, the client gets to keep the $285,840 and make an attractive return on their investment (target: mid-teens) using fully passive investments. When paired with the tax savings, the total return is even better!


Instead of paying that money to the government, they can use it to fund their lifestyle, and have more to leave to their kids.



Disclaimer: This is not advice and returns are not guaranteed. Investments may gain or lose value. Always consult a professional before making financial decisions.

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