Tax-Free Sale with a Unitrust
Over the years, the town has grown and development has moved toward their property. Their land is now next to a large commercial store, and they have leased the property to the store for overflow parking.
BILL: We have owned this property for over 10 years. It has been a good investment and increased in value. We have received just enough rental income in the last few years to pay the taxes. However, now we would like to sell.
LAURA: Our tax advisor has told us that if we do sell the land there would be a large capital gains tax. It would be nice if we could sell it without paying a lot of tax. We could also use some tax deductions this year.
The good news is that Bill and Laura can use a special trust to receive three very nice benefits. The benefits are:
- Bypass capital gains tax
- Increase income
- Receive a charitable deduction
LAURA: We also increased our income. After property taxes, the land was producing almost no income before. Now, we receive over $12,000 in income each year. This increased income is one of my favorite parts of the plan.