You have probably come to know that selling your ranch will
put you on a liable state to pay a tax charge of capital gain on ranch sale. This
may be displeasing as you realize the effect this capital gain tax charge will
have on your wealth, how it will extensively reduce it. To relieve you from the
misery, I would like to add here that there are ways one can avoid or defer tax
charge on ranch sale. So in order to avail this opportunity, your first step
should be to visit a financial advisor who will explain you all which I am
about to mention in this article.
Using Strategic Planning
Although this tax charge on capital gain is a matter made
obligatory by the state law, there are financial tools also created by law that
can come to a property seller’s aid. Therefore, if a ranch seller wishes to
make the most of the sale proceed amount, he should consult his options with a
financial advisor who will strategically plan a tax-free state prior to ranch
sale. Two financial tools that are commonly used to defer or avoid capital gain
tax on property are IRC Section 1031 Exchange and IRC Section 664 Charitable
Remainder Trust. The workings of these and how these tools can benefit a ranch
seller are described below in detail.
1031 Exchange Tool
The exchange tool can be used to defer capital gain tax
charge which can be applied if a ranch seller repurchases another property of
similar kind and worth. The ranch seller is bound to purchase the exchange
property within 180 days of making the ranch sale in order to avail the 1031
exchange tool benefit of going tax free. With this tool the ranch seller can
defer tax charge until he makes the sale of the exchange property in the future.
However, with the other section 664 CRT tool, the ranch seller can completely
avoid tax charge on capital gain.
664 Charitable Remainder Trust Tool
As the name implies, by using this tool, the ranch seller
places his ranch in the name of charitable trust as a form of partial donation.
Which means the trust will gain ownership of the ranch and agrees on giving a
percentage of profit to the ranch owner, which is made by using the ranch. This
percentage of profit becomes a source of passive income for the ranch owner
till he lives and can be passed on to his loved ones upon his death. By giving
ownership to the trust, the ranch owner is able to avoid tax completely and
makes more money than what he would have with the reduced wealth after tax cut,
if he had sold it otherwise.
Key Takeaway
If a ranch owner wishes to go
Saving
Tax On Sale Of Ranch Texas, he should consult an expert financial advisor
with years of expertise, skills and knowledge in the field. With the financial
advisors help, he can plan a tax-free state by using financial tools with which
capital gain tax charge could be avoided and his wealth can be preserved and
secured from getting reduced.
