Taxes And Proceeds
Form The Sale
Disclosure: The JCH Consulting Group is not an accounting firm. The following are merely the opinions of the JCH Group and is not intended as tax advice. Any concerns about your taxes should be directed to your CPA and tax advisers.
Your senior living brokerage has worked with you to find the right buyer for your assisted living or skilled nursing facility for sale. The transaction proceeded without any problems. You closed the sale, but now what to do with the profits? This is not a position you want to be in. It is important to plan ahead in regards to the proceeds of the sale.
This is a common question many sellers in the senior housing marketplace have. When multi-million dollar sales occur, even the smallest taxes and fees can equate to large numbers.
When it comes to your profit, what to do next largely depends on what your goals are after closing and your current tax position.
The Popular Choice
Many opt to have taxes deferred through a 1031 exchange. The 1031 exchange allows you to move the real estate value including debt and equity, of your current facility to that of another income producing real estate asset.
This is a great option if you are about to close a transaction on skilled nursing or assisted facility in order to buy another skilled nursing or assisted living facility. The 1031 exchange also benefits those choosing to retire and are in search of a more passive investment. This strategy allows you to step away from the day to day operations of a senior housing facility sand invest in an asset that demands less of your time and effort.
Avoiding Larger Taxes in the Future
If you don’t choose a 1031 exchange, when a sale is completed in the senior housing marketplace, capital gains taxes generally apply. The federal portion is 25 percent. The state tax varies by state, but in California, it stands at 13 percent. In total, transactions that take place in California are subject to 38 percent capital gains tax.
The general forecast for taxes is that they only increase over time. Because of this, some sellers in today’s market are choosing to pay the current capital gains taxes, 38 percent tax is better than a 40 percent or even 50 percent tax potentially in the future.
This option is ideal for those planning to retire by listing all their senior housing for sale or settling an estate. It is much simpler to settle the estate at present value and have it available as a liquid investment for family members in the future.
The Best Guidance from a Skilled Nursing or Assisted Living Brokerage
The JCH Group has had phenomenal experience making each transaction as lucrative as possible for all the parties involved. Our team delivers the best care homes for sale for your growing portfolio.
The JCH Consulting Group guides you through the process from beginning to end, so there is nothing you need to worry about. During the sales process, the JCH Group can connect you to the right professionals to ensure that your wealth is preserved.
For your complimentary asset valuation or to learn more about the resources available at the JCH Group, contact one of our team members at your convenience.