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176. Does an Installment Sale Defer the Tax on Recapture of Accelerated Depreciation? No. Can the Tax on Recapture of Accelerated Depreciation Nevertheless Be Deferred When an Installment Sale Occurs? Yes.
162. Transfer a Family Business to the Next Generation During the Parent's Lifetime, Retain an Asset for Income, Give the Transferee a Stepped-up Basis, Defer the Gain on Sale, Support the Parent with Deductible Rent, and Finance the Transaction, Too
June 28, 2010
A new report by National Real Estate Investor (see excerpts, below) is causing consternation among those who are involved in the commercial real estate sector of the U.S. economy, whether as owners, investors, lenders, appraisers, brokers, title insurers, closing and escrow companies, or whatever else. That’s because the report exposes what may be a decade of stagnation in that sector of the economy.
Lenders who are expecting rising commercial real estate values to rescue them from troubled properties may have a long wait. So may investors in tenant-in-common properties nationally. So may title insurers and others. And so, especially, may 1031 accommodators of tax-deferred exchanges.
The government is not helping matters, by its tacit encouragement of "pretend and extend" treatment for troubled commercial loans. That will drag out the process which the market absolutely cannot avoid, of working its way to knowable values.
For those who want to opt out of a decade of stagnation and move into profit quickly, the key is a private-sector financial process which accomplishes the following:
1. It pays in full commercial real estate loans that no longer make sense in light of today’s lower values;
2. It opens a commercial real estate lending facility for new loans in conservative relation to today’s lower values;
3. It increases, rather than decreases, the income of commercial real estate lenders;
4. It decreases, rather than increases, the risks of commercial real estate lending; and
5. It provides owners with instant equity in their commercial properties, instead of no equity and being "under water" on their loans.
Is this possible? Yes, it is, with the correct blend of certain non-real estate financial activities with commercial real estate lending—activities which have most people in the industry have thought to be unconnected with each other.
We’re here to connect them.—Stan Crow
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The Latest Installment addresses situations, questions and issues which are brought to us in the course of the consideration, negotiation or execution of transactions. We don't use the real names of parties to transactions, and we may edit the statement of the question to try to tell the story better. Please feel free to comment, or to take issue, or to raise your own question or situation. If you do the latter, please do not relate any confidential information.
The Latest Installment blog is edited by Stanley D. Crow, who is president of S.Crow Collateral Corp.