Video 4

When

Optimize your deductions and maximize your giving during these years and events.

To-Do

So ironically, we will diligently search for the best price when we buy something to save a tiny amount of money while, not really paying attention to the largest cost of our life – TAXES!

As referenced in the video, carefully pay attention to what kind of marginal tax brackets you’re going to be in every year. There are definitive significant jumps in the marginal tax rates that you need to be planning for.  Many take advantage of these charitable strategies to allow them to never to get to these higher levels.

If you’re at all contemplating the sale of something, carefully understand your cost basis and the tax consequences of the sale. Especially in real estate, you could have depreciation or accelerated depreciation that might be recaptured at sale at substantially higher than anticipated at long-term capital gains rates. So,

always understand your tax consequences before you going to take something to market or accept an offer.

You could state in the sales contract that you are considering pursuing a donation of the property or portion of the property before closing, and that the seller would accept this and work through this in the transaction. The charity that receives the property would agree that upon any subsequent sale they would come alongside you and convey their interest in the property to the buyer. At the closing, the nonprofit gets their interest with no taxes withheld, and the portion you keep you’ll have to recognize tax on that portion.

For those in their final, highest, earning years; it’s the time to be building up your retirement giving account.

You’ll be maximizing your charitable deduction at higher marginal tax rates. You’ll also be in a position upon retirement to have a giving bucket to continue to support causes you care about.

From an investment aspect you might be in a seller’s market. We’ve all seen cycles come and go. Don’t miss the opportunity to cash out at a very actractive price. I had a very wise mentor in commercial real estate who taught me 

“the time to sell us when somebody wants to buy”

Markets reverse, and it might be a long, long time before the buyers come back. Don’t let the tax tail wag the dog. If it’s time to take the gains rebalance or accept, what is a very rich offer, adding a giving component to the transaction can let you execute without the crushing tax consequence.