If you’re ready to sell your veterinary practice and commercial veterinary hospital real estate, you can invest in your future and avoid costly capital gains taxes with a 1031 Tax Deferred Exchange. Although it requires some rule-following and delicate timing, this tax strategy can help you hold onto your hard-earned money when it’s time to sell your commercial property. Plus, our veterinary real estate specialists at The Wine Group have the experience and knowledge to guide you through the entire process.
How Does a 1031
Revenue generated from the sale of a commercial or investment property is considered to be capital gains, and it’s subject to the capital gains tax. If the owner of a veterinary hospital decides to sell their practice along with the property, they’ll typically use the revenue to pay off any existing debt on the practice and property and then take the remaining sum as cash out of the transaction. Although you’ve worked hard to maintain your practice, property, and grow your business, you’ll still owe capital gains tax on the cash out generated by the transaction.
With a 1031 Exchange, however, you can avoid paying this tax by reinvesting the cash into a new commercial property or properties. To take advantage of this tax strategy, you must identify up to three commercial or investment properties of any purpose (of equal or greater value) within 45 days of the sale. You must then close on the purchase of the new property within 180 days.
Basically, instead of selling your property, cashing out, and paying major capital gains taxes, you can reinvest the assets you’ve spent your career building and continue to generate revenue from new commercial properties.
Tax Planning Guidance and Perfect 1031 Exchange Timing with The Wine Group
If you’re ready to start planning an exit strategy for your veterinary business, we welcome you to talk with our experts at The Wine Group about avoiding capital gains taxes by taking advantage of the IRS’s tax code section 1031. We’ll walk you through the entire process, help you find the right buyer for your property, and help you navigate the process of reinvesting your capital gains.