Estate Planning Secrets of Successful Real Estate Investors

March 1, 2016

If you are a real estate investor, estate planning allows you to optimize capital gains while reducing your tax liabilities.  Estate planning facilitates the strategic organization of assets to ensure that you attract a minimum of taxes on real estate holdings. It can be very complicated, but this solid plan will keep you organized and on track at all times.


Capital gains derived from the transfer or sale of a principal residence are not taxed. For obvious reasons, an investor can only have one principal residence. If a principal residence is held in joint tenancy with right of survivorship, the will of the surviving spouse dictates who ultimately receives the principal residence.  The selling of a principal residence, often the house the kids grew up in, can cause conflict and hurt feelings. Also, the transfer of the family house to some but not all of the kids and grandkids could cause similar feelings. Equalization through the use of cash and other estate assets in the will could alleviate some of these hard feelings.


Capital gains derived from the transfer or sale of a recreational property (not primary residence) are taxed. Holding recreational property in joint tenancy with right of survivorship will delay these capital gains, but similar to above, the will of the surviving spouse will control who receives the recreational property. A trust could be set up to better control who can use the recreational property and avoid capital gains taxes.


Sale or distribution of investment property results in capital gain or loss depending on the condition of the property and its market value. The profitable investment properties should ideally be transferred to desired beneficiaries in the last will and testament. Better yet, investment property should be owned through a holding company and those company’s shares should be placed in a trust.


With offices in Des Moines and Cedar Rapids, the experienced estate planning attorneys at the Iowa law firm of Whitaker Hagenow & Gustoff can help you plan your estate in accordance with your wishes, in the most cost-effective manner possible. Call or email us today for an initial consultation.




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