general educational and informational purposes only. It is furnished with the understanding
that the CB Administrative Services LLC as authors and publishers are not engaged in rendering
legal, accounting, investment, tax, or other professional advice and/or services.
Before making any decision, you should seek the advice of a qualified professional before proceeding. The
amount(s) payable to you which is reflected in this IST illustration is based on interest rates,
formulas and other factors provided by federal tax law and the IRS. No representation is made
that the payment amount is guaranteed for the rest of your life. This scenario makes certain
assumptions in order to illustrate the important aspects of this transaction. There may also be
additional considerations not accounted for in this example that may further affect whether
this is appropriate for you. Prior to engaging in this transaction, it is necessary that you review
your tax situation with your tax advisor to determine if this transaction is right for you.
The publication of this material is designed for informational purposes only in regard to the
subject matter covered. The material provided does not constitute an offer to sell or a
solicitation of an offer to buy any security. Any such offer may only be made based on review of
client's individual financial situation upon request.
a. For purposes of this illustration, if you reside in one state and your IST property is located
in another state, it is assumed that you will pay tax on the taxable capital gain in the
state in which the property is located, and you will pay tax on the interest earned on the
IST note in the state in which you reside. Your actual taxes will be determined by your
CPA or tax preparer at the time your tax returns are prepared.
b. These taxes represent the tax on the mortgage in excess of basis. They are part of the
capital gains liability but cannot be deferred by the IST; however, they can be reduced or
eliminated by paying all or a portion of the mortgage prior to the sale. For this
illustration, it is assumed that the taxes on mortgage in excess of basis are paid from IST
funds.
c. If there is a Mortgage Over Basis, the capital gain and depreciation recapture in that
amount are generally not deferrable. This illustration calculates a total MOB based on
input data and may reflect a higher MOB number. In some cases, there may be
opportunities to restructure to reduce MOB.
d. Recapture tax on depreciation in excess of "straight line" is not deferrable and is not
reflected here unless imputed in data submission. Straight line depreciation on real
property lowers the basis. The resulting increase in gain is deferrable.
e. These calculations may not consider Sect. 1250 recapture if applicable, nor tax on the
interest income for either with or without IST.
f. Transfer taxes not included but would apply equally to sales with or without using IST.
g. If you are eligible for all or part of the one-time capital gains exemption and wish to take
the exemption with this sale, please contact us to find out how it will impact these
calculations.
h. Your right to receive the money will be from a trust in which the proceeds from the sale
are reinvested in ways which may involve more or less risk, including fluctuating returns
and possible loss of principal, depending on where the proceeds are reinvested.
i. These are assumed rates. Final rate will be determined when you prepare your income
taxes.
j. This illustration is interest only. Amortized options are available. It is assumed that when
using an IST, no funds are retained by seller & net proceeds go into the IST.