Capital Gains Tax Solutions

The high leverage available for credit tenant properties makes it ideal replacement property for 1031 exchanges and capital gains tax deferral.

Sellers of real estate  owe both capital gains and depreciation recapture tax on the difference between the property’s sale price and depreciated tax basis.   The tax basis of the property is calculated as its original purchase price plus capital expenditures minus accrued depreciation deductions.  If a property has been owned for a long time or has experienced significant capital appreciation, the capital gains tax can consume a high percentage of the net sale proceeds after paying off mortgage debt. The tax obligation on a low basis property can even be higher than net cash proceeds and the investor will have to come out of pocket for taxes.

A tax-deferred 1031 property exchange gives property sellers the opportunity to realize cash from the transaction and purchase highly-leveraged and amortizing replacement property. The investor uses all equity from the relinquished property to acquire replacement property. When the exchange is complete, credit tenant property can be financed up to 95% loan-to-value based on the corporate rent guarantee. The seller receives the cash proceeds from refinancing tax free, and the guaranteed rent covers debt service.

Credit Tenant Capital uses sophisticated tax, finance, and legal strategies to design optimal 1031 solutions for our client’s specific needs.


Credit Tenant Capital | PO Box 1169 | Center Harbor, NH 03226 | 603-770-9485 | info@ct-capital.comWordPress Website Maintained by Sullivan+Wolf Design