Next time, before selling this type of appreciated property, you may want to consider a Charitable Remainder Trust (CRT), especially if you are older.
The Charitable Remainder Trust is the ONLY vehicle that will allow you to completely bypass all capital gains tax due on the sale of property. In return, you will receive an income stream based on the appraised value of the property before the sale, a substantial charitable deduduction to offset taxes, and you will be able to benefit your favorite charity or charities after you pass away.
They are very flexible. The only real “downside” is that you must leave at least 10 percent of the initial appraised value to the charity after you pass away. However, if you have this type of taxable gain, that would be nothing and you would be helping your favorite charity and not Uncle Sam!
Many people who are no longer looking for growth and are seeking income for retirement (while bypassing the cap. gain taxes and no longer having to manage the property) chose a Charitable Trust. They can also be formed after death minimizing estate taxes, etc. Personally, I know of a 40,000,000 CRT. They are a perfect way to get off the 1031 merry-go-round.
Check with an experienced estate planning attorney/firm or a large national charity for more information.
Concerning Private Annuity Trusts, I heard they have been disallowed by the I.R.S. (However, please confirm this.)
