I am a business broker, besides being a Commercial Real estate Agent. I make part of my living helping others buy and sell businesses. My role is transaction broker. I provide a limited form of representation to a buyer, a seller, or both, but do not represent either.
When people ask me if I think it is a good business, I have to tell them, "I am a salesman, I get paid if you buy, or if the owner sells. " do you really want to rely on my opinion?"
I try to use the businesses I put people in, so I would prefer that they are happy with their purchase. The trouble is, I have sold lots of them, and many were restaurants. If I frequented all of them, I might be much larger than I already am. But the key is, I try to help them through the transaction so that they have all the facts, so, if they buy, they are happy, even if I do not visit them regularly.
I do not know what makes a business successful. I don't think everyone who buys a successful business, will be successful. Nor will those who buy one that has failed will fail again. It is a formula which I do not have. I think you need the right mix of people, products, atmosphere, supply, demand, elbow grease and luck. Your business will need management, and decisions that will affect your day to day success. Some businesses succeed through sheer hard work. Others need something else. I suggest that you buy something, in which, you have experience, or at least enough knowledge to understand how it makes money and how to continue doing so.
Buy a business that needs your skills and is something that you will enjoy. Buy something for which you have passion and truly believe that you can make better.
Success will depend on you and the business. Lots of people buy a business to create a job for themselves. That is okay as long as you are qualified to satisfy the customers of that new business. Those customers are your new employer. If you make them happy, then you have a better chance at success.
Am I trying to scare you? No. All business involves risk. I just want you to be so sure that you can make it work, that it is worth that risk to you.
Sunday, September 5, 2010
Sunday, August 29, 2010
Creative Building Finance
If you are like a lot of business owners, your cash flow has been down the last three years. And now of course, the price of buildings have dropped dramatically. Interest rates are also way down, but you do not have the down payment to allow you to buy today. I am working with a company now who is facing these same issues. If they purchased, the monthly debt service on the building purchase would be less than their monthly lease payment.
I went to the building owner and offered a creative plan to get everyone what they wanted. I asked the owner to give the buyer the right to lease the building now, under some reduced rate and allow them an option to buy within twelve months.
This was a new building, and the buyer needed some customization improvements to make it fit their need. They had someone to do these improvements for them so it would not involve the landlord footing that bill.
I wrote a letter of intent to the owner for a three year lease, and asked for two months free rent to allow the buyer to move and improve the space as needed. I then asked for three months rent at half the normal rents with regular rents thereafter. I included an option to buy the building in the first twelve months at a rate comparable to other spaces selling in the area, with a little premium for the seller. I included a clause that after twelve months the purchase price would increase to the greater of three percent or the average price of sold listings for comparable properties in the area.
This is what I call 'Creative Finance.' This particular buyer had expectations of some growth and needed additional space. They were expecting a big contract in the next few months which would allow them to buy. This plan allowed them to move now, with significant reduction in out of pocket expense, tie up the building they wanted, so they didn't lose it and then give them a lease price comparable to match their budget, but in new space that they could own when their cash flow improved.
The building owner was getting the cost of carrying a vacant building paid for, a market rate lease if it didn't sell , and the liklihood to sell at a good price when buyer got their big contract. It was 'win-win' for both parties.
Sometimes you need a broker on your side to find a solution. We don't make any money unless some property changes hands, so in this market, we have to be creative. Call me to discuss your situation. Let me be find a creative solution for you.
I went to the building owner and offered a creative plan to get everyone what they wanted. I asked the owner to give the buyer the right to lease the building now, under some reduced rate and allow them an option to buy within twelve months.
This was a new building, and the buyer needed some customization improvements to make it fit their need. They had someone to do these improvements for them so it would not involve the landlord footing that bill.
I wrote a letter of intent to the owner for a three year lease, and asked for two months free rent to allow the buyer to move and improve the space as needed. I then asked for three months rent at half the normal rents with regular rents thereafter. I included an option to buy the building in the first twelve months at a rate comparable to other spaces selling in the area, with a little premium for the seller. I included a clause that after twelve months the purchase price would increase to the greater of three percent or the average price of sold listings for comparable properties in the area.
This is what I call 'Creative Finance.' This particular buyer had expectations of some growth and needed additional space. They were expecting a big contract in the next few months which would allow them to buy. This plan allowed them to move now, with significant reduction in out of pocket expense, tie up the building they wanted, so they didn't lose it and then give them a lease price comparable to match their budget, but in new space that they could own when their cash flow improved.
The building owner was getting the cost of carrying a vacant building paid for, a market rate lease if it didn't sell , and the liklihood to sell at a good price when buyer got their big contract. It was 'win-win' for both parties.
Sometimes you need a broker on your side to find a solution. We don't make any money unless some property changes hands, so in this market, we have to be creative. Call me to discuss your situation. Let me be find a creative solution for you.
Thursday, August 19, 2010
4.25% Interest Rate on Commercial Loans
I mentioned a perfect storm in a previous blog, which was lower interest rates and lower prices for commercial property. But now the rates are coming down even more, and I have to bring it up again, with more detail, so you don't miss it.
Some Commercial lenders have lending rates that mirror the Bond Market. Interest rates are tumbling in the Bond Market, so the these Commercial loan rates by lenders are spiraling down as well. This is one of those times where business owners who are dissatisfied with their facilities need to look closely at what they are spending on rent.
Let's crunch some numbers: Renting 8,000 square feet at $10 per square foot is $80,000 annually, or $6,666 monthly. If the space is for sale for $100 per square foot, as many are right now, that's $800,000 purchase price.
In order to qualify for rates like these, you need at least 20% down and occupy more than 50% of the space.
$800,000 X 20% Down payment = $160,000
Purchase price $800,000 - $160,000 = $640,000
Annual debt service on $640,000 at 4.25% with a 20 year amortization = $47,557 or $3,964 monthly.
Even if you are paying less than $10 per square foot to lease, it is still phenomenal.
Lease rate samples:
$8 X 8,000 sq ft = $64,000 $5,334 Monthly
$7 X 8,000 sq ft = $56,000 $4,667 Monthly
$6 X 8,000 sq ft = $48,000 $4,000 Monthly
$5 X 8,000 sq ft = $40,000 $3,333 Monthly
You cannot make your cash work for you better than building equity in your own property. If you can pay less, then it is outside of reality.
Here are some amortization numbers on some other sample amounts, You should be able to estimate your actual numbers from these
Loan Amortization samples:
Loan $ 500,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $ 3,096
Loan $ 250,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $ 1,549
Loan $1,000,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $ 6,192
Loan $2,000,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $12,384
Loan $3,000,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $18,578
With these kinds of numbers, you might want to invest in your company instead of the stock market. Call me, let me help you find better space and a better bottom line for you and your business.
Some Commercial lenders have lending rates that mirror the Bond Market. Interest rates are tumbling in the Bond Market, so the these Commercial loan rates by lenders are spiraling down as well. This is one of those times where business owners who are dissatisfied with their facilities need to look closely at what they are spending on rent.
Let's crunch some numbers: Renting 8,000 square feet at $10 per square foot is $80,000 annually, or $6,666 monthly. If the space is for sale for $100 per square foot, as many are right now, that's $800,000 purchase price.
In order to qualify for rates like these, you need at least 20% down and occupy more than 50% of the space.
$800,000 X 20% Down payment = $160,000
Purchase price $800,000 - $160,000 = $640,000
Annual debt service on $640,000 at 4.25% with a 20 year amortization = $47,557 or $3,964 monthly.
Even if you are paying less than $10 per square foot to lease, it is still phenomenal.
Lease rate samples:
$8 X 8,000 sq ft = $64,000 $5,334 Monthly
$7 X 8,000 sq ft = $56,000 $4,667 Monthly
$6 X 8,000 sq ft = $48,000 $4,000 Monthly
$5 X 8,000 sq ft = $40,000 $3,333 Monthly
You cannot make your cash work for you better than building equity in your own property. If you can pay less, then it is outside of reality.
Here are some amortization numbers on some other sample amounts, You should be able to estimate your actual numbers from these
Loan Amortization samples:
Loan $ 500,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $ 3,096
Loan $ 250,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $ 1,549
Loan $1,000,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $ 6,192
Loan $2,000,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $12,384
Loan $3,000,000 at 4.25% amortized on a 20 year scale with five & ten year balloons $18,578
With these kinds of numbers, you might want to invest in your company instead of the stock market. Call me, let me help you find better space and a better bottom line for you and your business.
Tuesday, August 17, 2010
Counting Customers
When you buy a business or commercial property, you will request time to perform Due Dilligence (DD). The Purpose of DD is to research anything that may affect the income, cash flow and value of the investment. I no longer practice accounting, I am merely the transaction broker for the business sale, so I cannot help you. You must rely on yourself, or your own team of experts. The bigger the investment, the more likely you will involve your attorney and or accountant to help you analyse the investment.
I sold a Lawn Service business once for $49,000. It had two employees, a good commercial grade mower, lots of poorly maintained equipment and seventy-five customers. The Buyer eventually lost the investment and walked away from the business. I hope there is something you can learn from their loss.
The difficulty in due-dilligence in a business this small is to verify the customers without notifying them of a change, and allowing them to consider their own change. Do not let that deter you. When you are buying a 'route' of customers. You must verify that those customers are current clients, not 'former' clients. The only way to do this is to see when they last paid and tie that out to your list and billing cycle. If you take the buyer's word, then you may be paying for customers who have fired you long ago, and your employees are still mowing their lawn.
The buyer's accountant suggested they mail a letter to the customers. The seller did not like this idea, as it might signal a change in ownership and move the customers to some sort of change, before the transaction was complete. Another suggestion was to tie out the deposits from each customer to a bank statement to show that they were actually customers. The problem was that this was Winter (in Florida) and the grass does not grow alot in November and December, so there would be several who had not paid lately. Also some people only paid periodically; quarterly, semi-annually etc.
As you might expect, the client accepted the client list and retained the same employees. It was a small investment and if it produced twenty-five percent less, it would still make money. I can give you a littany of things that went wrong in this transaction, but the biggest thing was not enough DD, and verification of the customers. Those customers who were no longer customers and were getting free lawn service. Dishonest employees who stole and sold everything not tied down, and ran up personal charges on the gasoline card for thousands of dollars. The same employees who dumped the $8,000 commercial mower upside down in a canal and turned it into spare parts instead of their main mower.
Slow down when you are looking to spend money. If the Seller is in a hurry, then you should be even slower. Don't trust people you do not know, until they prove themselves trustworthy. Determine what has the biggest value, and verify it's real value. Don't make drastic changes until you have spent time to determine if they are really necessary. And most important, do not leave new employees unsupervised, especially if they know more than you. Good Luck.
I sold a Lawn Service business once for $49,000. It had two employees, a good commercial grade mower, lots of poorly maintained equipment and seventy-five customers. The Buyer eventually lost the investment and walked away from the business. I hope there is something you can learn from their loss.
The difficulty in due-dilligence in a business this small is to verify the customers without notifying them of a change, and allowing them to consider their own change. Do not let that deter you. When you are buying a 'route' of customers. You must verify that those customers are current clients, not 'former' clients. The only way to do this is to see when they last paid and tie that out to your list and billing cycle. If you take the buyer's word, then you may be paying for customers who have fired you long ago, and your employees are still mowing their lawn.
The buyer's accountant suggested they mail a letter to the customers. The seller did not like this idea, as it might signal a change in ownership and move the customers to some sort of change, before the transaction was complete. Another suggestion was to tie out the deposits from each customer to a bank statement to show that they were actually customers. The problem was that this was Winter (in Florida) and the grass does not grow alot in November and December, so there would be several who had not paid lately. Also some people only paid periodically; quarterly, semi-annually etc.
As you might expect, the client accepted the client list and retained the same employees. It was a small investment and if it produced twenty-five percent less, it would still make money. I can give you a littany of things that went wrong in this transaction, but the biggest thing was not enough DD, and verification of the customers. Those customers who were no longer customers and were getting free lawn service. Dishonest employees who stole and sold everything not tied down, and ran up personal charges on the gasoline card for thousands of dollars. The same employees who dumped the $8,000 commercial mower upside down in a canal and turned it into spare parts instead of their main mower.
Slow down when you are looking to spend money. If the Seller is in a hurry, then you should be even slower. Don't trust people you do not know, until they prove themselves trustworthy. Determine what has the biggest value, and verify it's real value. Don't make drastic changes until you have spent time to determine if they are really necessary. And most important, do not leave new employees unsupervised, especially if they know more than you. Good Luck.
Thursday, August 12, 2010
Pre-screen Tenants or it will cost you!
I saw the movie Pacific Heights, in 1990, about a young couple ( Melanie Griffin and Mathew Modine) who bought a large house in San Francisco. They planned to renovate it, live in part of it, and rent the rest to cover their own living costs. A prosperous looking tenant (Michael Keaton) moves in but never pays any rent, drives the other tenants away and systematically ruins the house and the lives of the owners.
I remembered this movie recently as my neighbor, who lived a few houses away, had a tenant trash his house and left owing him three months rent.
His issue, as with many landlords, was not pre-screening tenants. Landlords want prospective tenants to move in quickly. Don't fall into that trap. Remember this, it is harder to get people out than in some times. You must make sure your tenants are the type of people who you would like to have a long term relationship. When selecting tenants to rent space in your commercial properties, make them fill out an application form. Check their credit, employment and rental history. It will cost you something, but will save you a lot in the long run. Do not take any deposit money from them until you are satisfied with their background. It is more expensive to use the sheriff to evict a bad tenant than to let it sit empty for a couple of months.
I want to sell you commercial properties, but unless you are going to use all of the the space for yourself or your company, then you will rent to people you do not know. So let's crunch a few numbers so you know what a pre-screening will cost.
There are many companies that can do these things for you. If you are going to be doing a lot of rentals, you should form a relationship with one so you get a flat rate. A simple internet search gives you a smorgasbord of services and prices. You can get complete searches for $34.95, National Criminal checks for $15.95. People Search for $9.95 and General Background checks for $19.95. For $50 you get: Nationwide Tenant Background Check which includes, SSN Verification, Address History, 7-Year National Criminal Database Search, Courthouse Verification of Criminal Database Records, National Sex offender Registry Check, all covering 43 states and the District of Columbia, including courthouse verification of all potential records associated with the subject. Including SSN verification, address history, a nationwide National Sex Offender Registry, and options to add a Federal Criminal Search, Education Verification, and Employment Verification.
So as you can see, it's only a few dollars, but it could save you a lot of money and aggravation down the road. (by the way the movie is rated R and has lots of violence....so it's not for everyone.)
I remembered this movie recently as my neighbor, who lived a few houses away, had a tenant trash his house and left owing him three months rent.
His issue, as with many landlords, was not pre-screening tenants. Landlords want prospective tenants to move in quickly. Don't fall into that trap. Remember this, it is harder to get people out than in some times. You must make sure your tenants are the type of people who you would like to have a long term relationship. When selecting tenants to rent space in your commercial properties, make them fill out an application form. Check their credit, employment and rental history. It will cost you something, but will save you a lot in the long run. Do not take any deposit money from them until you are satisfied with their background. It is more expensive to use the sheriff to evict a bad tenant than to let it sit empty for a couple of months.
I want to sell you commercial properties, but unless you are going to use all of the the space for yourself or your company, then you will rent to people you do not know. So let's crunch a few numbers so you know what a pre-screening will cost.
There are many companies that can do these things for you. If you are going to be doing a lot of rentals, you should form a relationship with one so you get a flat rate. A simple internet search gives you a smorgasbord of services and prices. You can get complete searches for $34.95, National Criminal checks for $15.95. People Search for $9.95 and General Background checks for $19.95. For $50 you get: Nationwide Tenant Background Check which includes, SSN Verification, Address History, 7-Year National Criminal Database Search, Courthouse Verification of Criminal Database Records, National Sex offender Registry Check, all covering 43 states and the District of Columbia, including courthouse verification of all potential records associated with the subject. Including SSN verification, address history, a nationwide National Sex Offender Registry, and options to add a Federal Criminal Search, Education Verification, and Employment Verification.
So as you can see, it's only a few dollars, but it could save you a lot of money and aggravation down the road. (by the way the movie is rated R and has lots of violence....so it's not for everyone.)
Sunday, August 8, 2010
Bob Parsons, an interesting guy
In 1984, he founded Parsons Technology in Cedar Rapids, IA and began selling MoneyCounts, a home accounting program out of his garage. Not only did Bob create Money Counts, but he also was selling a word processing program and a spreadsheet program at that same time for $99. This was unheard of, as business application software was several hundred to thousands of dollars, and out of the reach for most individuals.
In late 1987, Parsons was able to quit his job and focus completely on selling and programming MoneyCounts. I met him in the mid 80's. His daughter and my son were the same age and eventually went to school together. I started a software company in 1982, in Cedar Rapids. I spoke to Bob a few times over the years. He was a delightful, interesting man, and always treated me with respect. He was a legend, and he treated a small software vendor with respect. I never forgot that. One difference between our software and his, was that Bob, was trying to sell hundreds of thousands of copies of his software at a low price, and we were trying to sell $100,000 software to a select few. Bob's idea worked out better.
Bob also created a tax program which he sold for $39.95. Intuit's program was much more expensive, but not any better. Parsons Technology grew to be a 1,000-employee privately held company and in 1994 Bob sold his company to Intuit for $64 million. Whether Intuit used Bob's program, or their own really doesn't matter. The key was, Intuit eliminated the competition, and as Paul Harvey used to say, "Now you know the rest of the story."
Today, Bob is the CEO and founder of The Go Daddy Group, Inc., a family of companies comprising three domain name registrars, including the one you are certainly familiar with, GoDaddy.com
While following his success over the last twenty-five plus years, I have always been facinated by the way he did things. He seemed to swim against the current, when others were swimming with it, and he seemed to have the right formula in business. When I found his rules for success, I knew I had to share them on my Blog and tell this story.
Bob Parson's 16 Rules for Success
1. Get out and stay out of your comfort zone
2. Never Give up
3. When you are ready to quit, you are closer than you think
4. Accept the worst possible outcome
5. Focus on what you want to happen
6. Take things a day at a time
7. Always be moving forward
8. Be quick to decide
9. Measure everything of significance
10. Anything that is not managed will deteriorat
11. Pay attention to your competitors, but pay more attention to what you are doing.
12. Never let anybody push you around
13. Never expect life to be fair.
14. Solve your own problems
15. Don't take yourself to seriously
16. There's always a reason to smile
These rules are exactly what I would expect from Bob Parsons. Whether you are investing in a business or a real estate venture, if you want to have success, then I suggest you take what you can from Bob Parsons 16 rules for success. If it works, for you, someone might ask you, the ultimate compliment "Who's your Daddy?"
In late 1987, Parsons was able to quit his job and focus completely on selling and programming MoneyCounts. I met him in the mid 80's. His daughter and my son were the same age and eventually went to school together. I started a software company in 1982, in Cedar Rapids. I spoke to Bob a few times over the years. He was a delightful, interesting man, and always treated me with respect. He was a legend, and he treated a small software vendor with respect. I never forgot that. One difference between our software and his, was that Bob, was trying to sell hundreds of thousands of copies of his software at a low price, and we were trying to sell $100,000 software to a select few. Bob's idea worked out better.
Bob also created a tax program which he sold for $39.95. Intuit's program was much more expensive, but not any better. Parsons Technology grew to be a 1,000-employee privately held company and in 1994 Bob sold his company to Intuit for $64 million. Whether Intuit used Bob's program, or their own really doesn't matter. The key was, Intuit eliminated the competition, and as Paul Harvey used to say, "Now you know the rest of the story."
Today, Bob is the CEO and founder of The Go Daddy Group, Inc., a family of companies comprising three domain name registrars, including the one you are certainly familiar with, GoDaddy.com
While following his success over the last twenty-five plus years, I have always been facinated by the way he did things. He seemed to swim against the current, when others were swimming with it, and he seemed to have the right formula in business. When I found his rules for success, I knew I had to share them on my Blog and tell this story.
Bob Parson's 16 Rules for Success
1. Get out and stay out of your comfort zone
2. Never Give up
3. When you are ready to quit, you are closer than you think
4. Accept the worst possible outcome
5. Focus on what you want to happen
6. Take things a day at a time
7. Always be moving forward
8. Be quick to decide
9. Measure everything of significance
10. Anything that is not managed will deteriorat
11. Pay attention to your competitors, but pay more attention to what you are doing.
12. Never let anybody push you around
13. Never expect life to be fair.
14. Solve your own problems
15. Don't take yourself to seriously
16. There's always a reason to smile
These rules are exactly what I would expect from Bob Parsons. Whether you are investing in a business or a real estate venture, if you want to have success, then I suggest you take what you can from Bob Parsons 16 rules for success. If it works, for you, someone might ask you, the ultimate compliment "Who's your Daddy?"
Thursday, July 29, 2010
Capital Gains - Selling to chase the tax rate?
If you are an investor, you know what capital gains are, so they need very little explanation to most. But considering that some may be investing, or planning to invest/or sell an investment property for the first time, I will provide a simple explanation and crunch some numbers.
When you buy a property and sell it for a profit, or more than you paid for it , then you had a capital gain. If you held it longer than a year, then it is considered a Long Term Capital Gain, and thus subject to a more favorable tax rate.
Number crunching example: Property purchased for $100,000 in January 2008 and sold after January 2009 for $160,000, is treated as a long term capital gain. The $60,000 you made will be subject to a 15% tax, or $9,000.
I am going to ignor ACR ( accellerated cost recovery) and it's effects, to make this a single focus of the Capital Gain Rate. Ask your accountant to help you if you have an investment, and are making plans to sell.
Most of you have heard in the news that President Obama has a tax plan which will effect the Capital Gains rate. When Ronald Regan was President, the rate was 28%, during the Bush administration it was cut to 15% and is still in effect until the end of 2010. President Obama's is planning to raise it to approximately 23%. This may not be the same rate for all tax brackets, so see your tax advisor for your specific set of circumstances.
I have read about some experts suggesting that there will be a huge sell off of investment properties before the rate expires. It sounds logical......maybe. If this is the case, then that may mean taking a lower price/profit, to get it sold, to avoid paying 8% more in tax on the profit.
Let's crunch some of those numbers so you can see the opportunity, or insanity of such a move.
If you sold your property, for $150,000 at the end of 2010, to take advantage of the 15% capital gains rate, then the tax would be $7,500. (ignoring ACR) If you waited until after the tax change, and sold later at the new tax rate, then it would cost you $11,500 or $4,000 more in taxes. But consider that many others may be selling at that time, and you only got $150,000 when it was actually worth $160,000. If you waited, your gain may have been $60,000 and your tax under the new rate would be $13,800. Look at the net cash to you. Selling quickly made you $50,000 - $11,500 = $38,500 net. Selling later, (possibly) $60,000 - 13,800 = $46,200 net. You might have made more, when less people were selling, if you ignored the tax increase. I don't have a crystal ball, and cannot predict the effect.
I don't think anyone can predict the real effect of a tax rate increase on your situation. Bigger or smaller numbers may change the results. Just consider that you should sell properties based on a plan, or the market, or your needs, or the value of your property, and not to chase a tax rate.
When you buy a property and sell it for a profit, or more than you paid for it , then you had a capital gain. If you held it longer than a year, then it is considered a Long Term Capital Gain, and thus subject to a more favorable tax rate.
Number crunching example: Property purchased for $100,000 in January 2008 and sold after January 2009 for $160,000, is treated as a long term capital gain. The $60,000 you made will be subject to a 15% tax, or $9,000.
I am going to ignor ACR ( accellerated cost recovery) and it's effects, to make this a single focus of the Capital Gain Rate. Ask your accountant to help you if you have an investment, and are making plans to sell.
Most of you have heard in the news that President Obama has a tax plan which will effect the Capital Gains rate. When Ronald Regan was President, the rate was 28%, during the Bush administration it was cut to 15% and is still in effect until the end of 2010. President Obama's is planning to raise it to approximately 23%. This may not be the same rate for all tax brackets, so see your tax advisor for your specific set of circumstances.
I have read about some experts suggesting that there will be a huge sell off of investment properties before the rate expires. It sounds logical......maybe. If this is the case, then that may mean taking a lower price/profit, to get it sold, to avoid paying 8% more in tax on the profit.
Let's crunch some of those numbers so you can see the opportunity, or insanity of such a move.
If you sold your property, for $150,000 at the end of 2010, to take advantage of the 15% capital gains rate, then the tax would be $7,500. (ignoring ACR) If you waited until after the tax change, and sold later at the new tax rate, then it would cost you $11,500 or $4,000 more in taxes. But consider that many others may be selling at that time, and you only got $150,000 when it was actually worth $160,000. If you waited, your gain may have been $60,000 and your tax under the new rate would be $13,800. Look at the net cash to you. Selling quickly made you $50,000 - $11,500 = $38,500 net. Selling later, (possibly) $60,000 - 13,800 = $46,200 net. You might have made more, when less people were selling, if you ignored the tax increase. I don't have a crystal ball, and cannot predict the effect.
I don't think anyone can predict the real effect of a tax rate increase on your situation. Bigger or smaller numbers may change the results. Just consider that you should sell properties based on a plan, or the market, or your needs, or the value of your property, and not to chase a tax rate.
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