New Method To Minimize Capital Gains Taxes PDF Print E-mail
Written by Kelly Ramirez   
Monday, 17 May 2010 14:58
Highly appreciated assets can be a double edged sword. The focus of investors is often on buying an asset low and then selling it high. However, some people neglect to consider how much of the proceeds they will keep after taxes. Of course realizing a profit from selling an appreciated asset is important but some consideration should be given to the capital gain implications of sale.
by KellyRamirez


Highly appreciated assets can be a double edged sword. The focus of investors is often on buying an asset low and then selling it high. However, some people neglect to consider how much of the proceeds they will keep after taxes. Of course realizing a profit from selling an appreciated asset is important but some consideration should be given to the capital gain implications of sale.

A capital gains tax is asessed on the difference between the purchase price and sales price of an asset. Capital gains are usually linked with life insurance policies sold as life settlements, stocks, bonds and real estate among other things.

A new strategy to reduce the tax liability of a capital gain is the Charitable Installment Bargain Sale. As an asset becomes more highly appreciated the strategy becomes more attractive. It has the ability of changing a sale of an asset from a taxable event into a tax deduction.

A Charitable Installment Bargain Sale is based upon an asset owner selling their asset to a recognized charity at a discount. An appraisal must be made to establish the asset's market value. The difference between the appraised market value and the discounted sales price constitutes a charitable donation. As a result, the asset seller receives a tax deduction for that amount. The seller is then paid in installments by the charity for a mutually agreed upon time.

After purchasing the asset, the charity can hold it or resell it. Usually an annuity is purchased by the charity to fund the ongoing payment installments to the asset seller. The benefit to the charity is the receipt of a discounted asset.

Charitable Installment Bargain Sales are being used successfully with a number of different assets. Specifically the strategy is gaining popularity in the life settlement industry. In addition, it is has been used when real estate sellers want an exit from 1031 exchanges without incurring hefty tax bills.

Not every asset sale is right for a Charitable Installment Bargain Sale. Although it is prudent to evaluate all tax strategies as a consideration when planning to sell any asset. Charitable Installment Bargain Sales are a new but increasingly popular strategy to preserve more of the profits from an asset's sale.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

Looking to find the most value in a life settlement, then visit www.amritafinancial.com to find the best information on life settlement taxation for you.