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August 26, 2008

Economic Stimulus Package Closes Loophole, Enables Greater Financial Planning Opportunities Via Structured Installment Sales

by John Darer CLU ChFC CSSC

The Housing and Economic Recovery Act of 2008 ("HERA")

The Housing and Economic Recovery Act of 2008 ("HERA") was signed into law on July 30, 2008. Included in HERA 2008 is an amendment to Internal Revenue Code Section 121 ("IRC 121") designed to preclude taxpayers from excluding the gain on the sale of a residence attributed to periods of "nonqualified use" (any period after 2008 when the residence is not used as a principal residence).

The purpose of the IRC 121 amendment was to close the loophole that permitted a taxpayer to sell a primary residence and utilize the full home sale capital gains tax exclusion ($250,000 for single, and $500,000 for married taxpayers); then convert an existing vacation or rental property into a primary residence, satisfy the two of the five year residency requirement, and then sell the new primary residence and again utilize the full home sale capital gains tax exclusion.

The closure of the loophole means an added capital gains exposure which may be mitigated through the use of a structured installment sale (a/k/a "structured sale). MetLife Structured Installment Sale How It Works 2022

"When One Door Closes, Another Opens..."

For more information about structured installment sales please contact John Darer at 888-325-8640

Last update November 27, 2023

 

 

Posted at 11:56 PM in Capital Gains, Exit Strategy for Property, Financial Planning, HERA 2008 Capital Gains, Housing and Economic Recovery Act 2008, IRC 121, MetLife Structured Installment Sale, Structured installment sales, Structured Sales |

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Guide to Structured Settlements 2024

  • What is a Structured Settlement? What You Need to Know
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  • Rated Ages and Structured Settlement Cost
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  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
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    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements 2024
    Ways You Can Structure Your Settlement Payments in 2024. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
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    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as capped or uncapped index linked structured settlement annuities where payments are adjusted based on upside changes in the S&P 500 or another index, Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team in 2024.
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  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
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Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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