If you own the building and real estate that your business operates in you are in an excellent position for the sale of your business. You can keep the real estate and lease it back to the buyer; but you can also sell the property with the business and either do a 1031 exchange or sell the property and use tax planning to minimize your tax liability.
If you opt to keep the building and lease it back to the buyer you defer the taxes on the sale of the property, create an ongoing stream of income from the lease, and since you are the landlord, you control the lease which assures there will not be a problem in obtaining a reasonable lease when you sell your business.
Business owners often do not wish to be the landlord of the business and new owner. Selling the property does not necessarily mean you have to pay taxes when the transaction closes. You can work with one of our Tax Strategy CPAs to minimize the taxes or opt to do a 1031 exchange, acquire a similar property, and defer the taxes on the sale of the property.
The 1031 exchange in simple terms allows a commercial or income property owner to sell a property and purchase a similar property within 180 days without paying taxes on the sale of the first property. There are a number of conditions tied to a 1031 exchange. Consult your tax advisor regarding this and read more about 1031 exchanges here.
Wikipedia 1031 exchange https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031
1031 Exchange FAQs http://www.1031exchange.com/faq/
If you choose to sell the real estate this makes the business very attractive to buyers. The opportunity to purchase real estate with the business gives the buyer a secure asset that will appreciate in value and locks in the building-facility operating expense, reducing their risk for ever increasing lease expenses.
The purchase of the real estate can be financed with an SBA 504 loan with favorable terms for the buyer, again, making this a very attractive purchase and effectively a cash transaction for you.
If you are considering the sale of the real estate with your business consult with us before you make any decisions regarding the sale of the real estate