Another Magnum Capital specialty is finding sellers in need of a tax-advantaged selling strategy. These sellers have owned their properties for many years and are at the end of their depreciation cycle. Unless they can sell their commercial real estate in a tax-efficient transaction, they face heavy capital gains taxes. In 2021 alone, Magnum brokered $400M worth of tax-efficient transactions. Sellers repositioned their financial portfolios and recycled their capital. Buyers acquired high-quality commercial property with strong potential for long-term appreciation.

We suggest another option to our seller clients in certain circumstances. Although not widely known, it involves selling your commercial real estate assets to a non-profit owner, developer and manager of affordable apartment homes for low-income individuals and families. Under this arrangement, a non-profit acquires existing apartment complexes and repurposes them as Naturally Occurring Affordable Housing (NOAH).

Why does Magnum recommend this? A non-profit can take advantage of their 501(c)(3) non-profit status to maximize the purchase price, often yielding financial benefits to sellers not available in a typical sale to private parties. Among the tools of this sale is a Tax-Exempt Seller Note (TESN). A TESN benefits a seller in two important ways:

• Deferral of some capital gains taxes
• Annual tax-exempt income stream