- 1). Find out if you held your corporate-owned real estate for at least six months and if you plan to purchase other small business stock within 60 days of selling. Internal Revenue Service Code Section 1045 allows an individual or business owner to roll over capital gain from selling qualified small business stock held for more than six months if other small business stock is purchased within 60 days. However, if you are selling as an asset sale rather than a stock sale, Section 1045 will not be applicable to the transaction.
- 2). Find out if the sale of your corporate-owned real estate falls within the sale-kind exchange rules of IRS Section 1031. If it does, your asset sale can still qualify for favorable tax treatment. Section 1031 states that loss or gain is not recognized if real estate held for productive use in a business is exchanged for property of a "like-kind" to be held for similar purposes. To qualify under Section 1031, there must be an exchange of like-kind property, such as the exchange of real estate for other real estate.
- 3). Assume all real estate losses in the same year that you assume real estate gains. If you plan to sell the real estate for profit, consider purchasing a bigger and more expensive property or purchase investment property simultaneously. This will reveal a loss on your real estate transactions, which will help you to avoid being required to pay taxes.
- 4). Put your real estate holdings in a trust fund. A real estate lawyer can place all property and collateral as part of a non-taxable trust to convey to your heirs upon death. This will allow you to generate a profit from the property, buy and sell real estate more easily and do so with little or no taxable consequences.
- 5). Give the profits on the sale of the real estate to family members. The IRS allows gifts to family members to be non-taxable. If the sale of the property lies below the IRS taxable limit, you can avoid paying taxes altogether by gifting the profit into an account for a family member or you can disburse the amount among several family members to meet any limitations.
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