Challenge and Solution
CHALLENGE
An individual wants to buy a second home, but is concerned about the tax implications for his family. He has previously stated he would like to pass the vacation property on to his then college-age children.
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POTENTIAL SOLUTION
Arrange for his two adult children to own the house. By making annual gifts to the children, they would pay for the house over time. By not having the home in his name, he would then be able to minimize estate taxes. The future capital gains and built up equity will be removed from the parents' estate.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
CHALLENGE
A client owned a real estate property that was upside down. In addition to wanting to avoid having to bring money to closing, he didn't want to sell for "less than it was worth". The property was costing him money annually for taxes, interest and insurance. At the same time, this property was an emotional burden and a source of frustration.
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POTENTIAL SOLUTION
We would perform a detailed analysis and present our results in an easy-to-understand visual way. It shows that the property would need to appreciate well beyond expectations over the next several years to break even. Furthermore, it shows that even if the property got back to even, it would still cost him more to hold the property for that amount of time rather than just selling now. Soon after, the client would be able to sell the home and remove a significant expense and source of frustration.
These are hypothetical examples for illustration purposes only. Actual investor results will vary.
While we are familiar with the tax provisions of the issues presented herein, as financial advisors of Raymond James we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.
