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Top Adding - Enhancing Your Property Sale - A Fresh Opportunity To Defer Capital Gains
The Challenge
Like many people, your real estate is probably one of your single largest assets in your financial portfolio. As a result, there is little doubt that the sale of any property - be it a primary residence, vacation home, investment or rental property, raw land, or a commercial parcel - all bring monumental tax anxiety to mind for you. With
Like many people, your real estate is probably one of your single largest assets in your financial portfolio. As a result, there is little doubt that the sale of any property - be it a primary residence, vacation home, investment or rental property, raw land, or a commercial parcel - all bring monumental tax anxiety to mind for you. With
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
skyrocketing values across the nation over the past several years, these concerns are paramount to all individuals and families who desire to limit the tax hit Uncle Sam takes on their sale. As you probably know, until now, a selling party had little option on the sale of a personal residence, and only a handful of options on the sale of investment properties, raw land
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
r commercial real estate. Private Annuity Trusts, TIC’s, Charitable Remainder Trusts and 1031 Exchange are all well known, but carry some drawbacks with their execution and administration, not the least of which, are the significant costs of setup and annual management. While not the panacea to every situation, there is a new and exciting product, the Structured Sale, w
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
hich is rapidly growing in popularity.
The Structured Sale is providing an opportunity to avoid immediate tax liability and grow your funds in a customized manner you design.
Not Your Grandfather’s Annuity
The Structured Sale Annuity takes advantage of two IRS Revenue Rulings (82-122 & 75-457) and allows a selling party to place any portion of their
The Structured Sale is providing an opportunity to avoid immediate tax liability and grow your funds in a customized manner you design.
Not Your Grandfather’s Annuity
The Structured Sale Annuity takes advantage of two IRS Revenue Rulings (82-122 & 75-457) and allows a selling party to place any portion of their
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
roceeds into a fixed annuity product with a guaranteed yield and rate of return paid back to the seller. Unlike traditional annuities, however, the new Structured Sale Annuity product offers unprecedented flexibility in how the guaranteed funds are paid out. The individual can truly design the payment schedule to meet their unique financial needs. Monthly, quarterly, se
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
i-annual or annual payments are all available, as are future lump sums in any combination. Sellers have the choice of starting payments immediately (regardless of their age) or deferring payments for up to 20 years, maximizing the growth and creating a subsequently higher yield on the back end. This is a great tool to help supplement retirement, fund a college education
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
for children or grandchildren or provide for future lump sums that can be used to take advantage of other investment opportunities or help pay large estate tax burdens. While all of these advantages are exciting in and of themselves, perhaps of greater importance to the Seller is the fact that a guarantee period can be placed on the payment schedule, ensuring that the
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
nnuitant’s Estate will continue to receive funds for as long as 40 years, even if they are deceased. Moreover, this product offers guaranteed financial security, allowing Sellers to be more aggressive with other investment opportunities. Best of all, the payments are guaranteed by leading life insurance companies (all with an A+15 rating by A.M. Best.), and are taxed at
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
a deferred rate, in accordance with form 6252 of the IRS.
A New Strategy For A Slowing Real Estate Market
“How large a future value do you ultimately want or need?” With a slowing real estate market in many parts of the country, many Sellers are now listing their properties for less than they had hoped. However, by answering the question “how large a
A New Strategy For A Slowing Real Estate Market
“How large a future value do you ultimately want or need?” With a slowing real estate market in many parts of the country, many Sellers are now listing their properties for less than they had hoped. However, by answering the question “how large a
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
future value do you ultimately want or need?” you can utilize the Structured Sale concept to afford to potentially accept a lower purchase offer. Why? Because a structured sale will allow you to avoid immediate taxation and you can grow the net proceeds to a future dollar value ultimately higher than the asking price – many times significantly so.
Becoming knowledgeabl
Becoming knowledgeabl
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
about this key concept can allow you to sell your property with much more peace of mind.
The Fine Print
Does the concept of the Structured Sale Annuity seem too good to be true? There are indeed some restrictions imposed by the IRS, but they are all manageable. In order for the benefits described herein to be realized, the Seller must avoid construct
The Fine Print
Does the concept of the Structured Sale Annuity seem too good to be true? There are indeed some restrictions imposed by the IRS, but they are all manageable. In order for the benefits described herein to be realized, the Seller must avoid construct
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
ive receipt of the funds. The Buyer, at the Seller’s request, will direct appropriate funds to be sent from the escrow account - to the assignment company owned by the life insurance company. The Assignment Company in turn purchases the identified annuity and promises to make all future periodic payments to the Seller. A simple one page sales agreement between the Buyer
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
and Seller includes the necessary language allowing for the structure, with the terms of the agreement governing the payment schedule. Also, note that the minimum premium the life insurance companies will accept is $100,000.
Show Me the Money
Let’s assume for sake of example that you are 50 years old, and you wish to sell your property for $1,000,000.
Show Me the Money
Let’s assume for sake of example that you are 50 years old, and you wish to sell your property for $1,000,000.
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
You decide to keep $500,000 out of the transaction, perhaps because this portion will already come to you without capital gains tax because of the maximum Section 121 exclusion or simply because you need the funds to pay some associated obligations and want to have additional money immediately available. How might investing the remaining $500,000 through the Structured
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
Sale product potentially provide you with some financial benefits? The following are some examples of how this might work:
Option #1:
Cash at Closing: $500,000
Structured Annuity: $2,538 per month, beginning one month from closing, for life, with a 30 year guarantee ($913,680).
Total Sale: $1,413,680
(Should you live 40 years, the life company will continue to pay
Option #1:
Cash at Closing: $500,000
Structured Annuity: $2,538 per month, beginning one month from closing, for life, with a 30 year guarantee ($913,680).
Total Sale: $1,413,680
(Should you live 40 years, the life company will continue to pay
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
he obligation. Should you decease ten years into the agreement, the life company will continue to pay your Estate for the remaining 20 years of the guarantee period.)
Option #2:
Cash at Closing: $500,000
Structured Annuity: $1,810 per month, beginning one month after closing for 20 years only ($434,400).
$500,000 lump sum payment made in 20 years.
Total Sale: $1,43
Option #2:
Cash at Closing: $500,000
Structured Annuity: $1,810 per month, beginning one month after closing for 20 years only ($434,400).
$500,000 lump sum payment made in 20 years.
Total Sale: $1,43
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
4,400
(Again, this is a classic retirement scenario with a large lump sum on the back end that will assist in paying Estate Taxes to your heirs, or fund potentially necessary assisted living costs.)
Option #3:
Cash at Closing: $500,000
Structured Annuity: $5,057 per month, beginning at age 60, for life with a 20 year guarantee ($1,213,680).
Total Sale: $1,713,680
(Again, this is a classic retirement scenario with a large lump sum on the back end that will assist in paying Estate Taxes to your heirs, or fund potentially necessary assisted living costs.)
Option #3:
Cash at Closing: $500,000
Structured Annuity: $5,057 per month, beginning at age 60, for life with a 20 year guarantee ($1,213,680).
Total Sale: $1,713,680
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
This is a classic retirement scenario that allows for substantial growth and deferral of tax liability.)
Option #4:
Cash at Closing: $500,000
Structured Annuity: $1,700 per month, beginning one month after closing for 10 years only ($204,000).
$3,030 per month, beginning in 10 years, for 10 years only ($363,600).
$5,425 per month, beginning in 20 years, for 10 year
Option #4:
Cash at Closing: $500,000
Structured Annuity: $1,700 per month, beginning one month after closing for 10 years only ($204,000).
$3,030 per month, beginning in 10 years, for 10 years only ($363,600).
$5,425 per month, beginning in 20 years, for 10 year
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
s only ($651,000).
Total Sale: $1,718,600 (Another retirement scenario with step increases to account for inflation.)
If you have a personal residence, second home, or investment / commercial property with at least this much potential taxable gain, you owe it to yourself to consider a
Total Sale: $1,718,600 (Another retirement scenario with step increases to account for inflation.)
If you have a personal residence, second home, or investment / commercial property with at least this much potential taxable gain, you owe it to yourself to consider a
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
Structured Sale benefit analysis as part of your sale. Because there are no associated charges, ever, with the purchase or management of the funds by the life insurance company or the broker placing the annuity (a further potential benefit over the aforementioned PAT’s, TIC’s CRT’s and 1031 Exchange) this is truly a “no harm, no foul” strategy to consider and assess
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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