If you visit the National Archives in our nation’s capital, you can
view the original Constitution and the Bill of Rights. The writing is
faded making it difficult, if not impossible, to read in the dim lit
Rotunda.
The Constitution is the frame, our skeletal structure. The Bill of
Rights gives us our sight, our ability to feel, to reach out and
touch; it’s our hearing and our heart. Without the Bill of Rights we
are but raw intelligence, drifting at sea without a sail.
Listen now, to the words of our beloved Ten Amendments, our Bill of Rights.
Sell your rental property and pay no tax.
This past Sunday, I was Tom Kelly’s guest on KIRO Radio’s Real Estate Today. Tom does a great job educating all of us about real estate. You can catch a podcast of the program here
If you are a landlord who wants to finally get out of the “landlording” business, but you cringe at the thought of paying tax on all of that depreciation you have taken over the years (yes, that’s right, you have to recapture all of that phantom depreciation and pay tax on it) and you don’t really want to pay capital gains tax on the balance of the gain, then maybe you should think about using something called a charitable remainder trust.
In a nutshell, if you have a rental property that is paid for but you have depreciated the heck out of it, and you no longer want to be a landlord, you can create a special trust to allow for the sale of the property without tax obligation. With the help of your favorite attorney, you establish a charitable remainder trust. You then transfer the real estate into the trust and proceed to market the property for sale. The trust sells the property and reinvests the proceeds in stocks, bonds, and any other prudent investment that you choose. You proceed to enjoy annual income and you receive an upfront charitable tax deduction for a percentage of the value of the rental property (depending on your age and what kind of a return you want – a minimum of 5%). Are there catches to this? Of course, and there are many rules that apply to this type of transaction, but it may be something to explore if you have an appreciated asset that you would like to sell and you don’t want to pay the tax that is otherwise due. Find out more about charitable remainder trusts.
60 years of simple choices
I met with a nice fellow who had moved down the age continuum quite a ways. He told me a story about when he was in the army, out on a two week training maneuver. The weather was terrible, the conditions were awful, and everyone was miserable almost all of the time. They would cut down a tree and light up the stump to try and stay warm, to no avail. They slept off and on, but mostly off and usually wet. One day, when he was waiting in the chow line, he kept hearing the cook whistle and then sing a variety of tunes and songs. When he got up to the head of the line, the cook smiled and handed him what passed for food. My new friend passed back a few choice words and expressions and then asked the cook how on earth he could be so happy. The cook smiled and said simply that he figured it took about the same amount of energy to be miserable as it did to be happy and he’d just as soon be happy than miserable. The words from 60 years ago have stuck with my friend and he was happy to pass them on to me. I wish I had met him a few years ago. It is so simple.
Legal Line December 17, 2011
Podcast: Play in new window | Download (Duration: 49:25 — 45.2MB)
Bob and Ted field this weeks listener questions.
Legal Line December 10, 2011
Podcast: Play in new window | Download (Duration: 49:12 — 45.0MB)
Bob and Ted discuss tips on handling custody arrangements during the holidays.
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