Starbucks? Coffee beans? Lattes? What do they have to do with taxes? Don’t worry, we will get to that!
But first, let’s discuss your Golden Years again, shall we? Your upcoming trip to Australia, gifts for grandkids, golf carts, healthcare...All that in addition to the numerous investment options out there, such as securities, bonds, annuities, and the like. But here is another option you may not have considered: A Single Tenant Double Net Lease Starbucks building. In other words: real estate. But this is a different kind of real estate - commercial real estate - where you might own the building but you are not running the business. That coffee behemoth, Starbucks, does that just fine. Your job is to take care of the building and the land, and they continue to make frappuccinos and half-caf, skinny, double lattes. They sell the doughnuts and scones - and you collect a check each month.
If you haven't already considered this idea, now is the time. Our generation is watching pensions slip into the night, and we'll need passive income from somewhere. For example, I once had a client, in my former career, who sold a few homes in a wealthy area of CA. He did a Section 1031 tax exchange for a Starbucks near a major university in Ohio. A 1031 or like-kind exchange is a tax deferment strategy executed in a business or investment property (often real estate) transaction. The seller of real estate can take the proceeds of their sale and, in a set time period, roll these proceeds over into another piece of like-kind real estate property tax free (i.e. tax deferred). This is a very popular tax strategy that many real estate investors utilize. However, they can be tricky and there are a number of rules, including the requirement that a “Qualified Intermediary” is engaged to execute the exchange. We do advise you to speak with your trusted financial advisor before making any decisions regarding a 1031 exchange, of course.