Real Estate

The Organization: A real estate development company
The Challenge: Minimizing taxes on the sale of a partial piece of a much larger property

Edelstein & Company's client was negotiating to buy a piece of property from the State of Massachusetts that had formerly been the site of a prison. On the property was a townhouse and adjacent land that could be used as lots for single-family houses. The client had found a developer who wanted both. The question posed, was there a way for the client to purchase the property so as to postpone the payment of any tax on the immediate resale of the property to the developer?

Edelstein & Company's answer was yes, provided it was done in certain steps. If the client were to buy the property and sell it to the developer, there would be an immediate gain on the sale of that portion of the property. But if the client formed a joint venture with the developer to buy the property, the developer could take the piece he wanted and distribute cash to the client through the Partnership.

The deal was ultimately structured in a way that enabled the client to have the purchase price covered by the two developers who eventually participated in it. Given the fact that it was the client's expertise and negotiating skills that had made the deal possible, it seemed only right for the deal to be done this way.