Real Estate Investment Property Lease to Sell for Parents
My parents are ages 90 and 91 and need to move to assisted living soon. We would like to sell their rental property in the most tax efficient way possible. The property is fully depreciated and worth about $275,000 and my parents are in the 24% tax bracket. The current tenant is interested in buying, but does not have enough money to make a 20% down payment. Is it possible to sell the property with a “lease to own” contract to minimize capital gains taxes? How are lease to own contracts typically structured in cases like this? We also want to sell appreciated stocks and move the assets to treasuries to minimize risk as we fund their assisted living expenses, but do not want to incur to much capital gains all at once. The rental property is cash flow positive so it is the last asset we want to sell if possible. They have a pension but no Long Term Healthcare Insurance.
Terry Says
OK, you need professional tax advice regarding the structuring of a deal for the property. I honestly can’t answer that for you.
BUT, you also need estate planning advice. If your parents die owning the stocks, they will avoid all capital gains. But if you know you are going to need that money for their expenses, then you need to work with an estate planning attorney and a cPA about the tax implications of funding their long term care — and ways to preserve value for their heirs.
Go to www.NAELA.org– the website of the National Academy of ElderLaw Attorneys. Or if you’re in Chicago, I think you should contact Attorney Kerry Peck Here’s his website: https://www.peckbloom.com/kerry-peck.html
There are a LOT of moving pieces to these decisions and you need a professional guide to do it right. But I’m glad you’re asking the questions now while they are competent to sign forms and make decisions.
