Tired landlords01
You are done with tenants.
Rentals, ideally paid off, and no appetite left for 3 a.m. calls. Selling triggers the tax all at once. Contributing does not.
PartnersContribute land
Put the property in. Keep the income. Stop managing it.
If you own rental property or land you have been sitting on, you can contribute it to Clear Properties in exchange for yield-bearing shares.
- Tax when you contributeNone, §721
- What you receiveShares, 1:1
- The incomeKeeps arriving
- Tenants and repairsNot yours
Selling itA closing
Your property$437,000
Cash after taxRecapture, capital gains, state tax
Depreciation recapture, capital gains and state tax, all at once.
Contributing itSection 721
Your property437,000 shares
Yield-bearing shares, one for each dollar of value
Under section 721, contributing property to a partnership in exchange for an interest in it is not a taxable event.
We are not your tax adviser. Everything here is how the structure works, not advice about your situation. Bring your CPA to the second conversation and we will send them the documents.
01How it works
A contribution, not a sale.
Four steps, and none of them is a closing.
01
You put the property in.
The deed goes into a nominee trust instead of to a buyer.
TitleNominee trust
BeneficiaryClear Properties
Taxable eventNone
02
You receive shares.
One share for each dollar of value. No boot, no balancing mechanism.
Property value$437,000
Shares issued437,000
Boot$0
03
The cash keeps arriving.
Rent is earned at the project, which pays its own costs first.
RentAt the project
Taxes, upkeepPaid first
The restTo every holder
04
Nobody goes first.
Clear Capital holds shares on the terms you do.
PoolThe same one
PriorityNone
Preferred returnNone
The agreement requires mandatory tax distributions, so you are never handed a K-1 for income you did not receive in cash.
02The downsides
The honest downsides.
Every one is a real cost of doing it this way.
Five costsRead before you sign
- 01LiquidityShares are illiquid compared with cash.
- 02ControlYou do not control the properties.
- 03PaperworkYou get a K-1, which arrives later than a 1099, and your accountant will charge for it.
- 04Deferred taxThe deferred gain still exists, and comes due if you ever sell the shares.
- 05ConcentrationRisk moves from your one building to a fund. Usually better, but a change, not a removal.
We would rather you read these here than discover them after you sign.
03Who this is for
Three people this is built for.
Each one is giving up something different, and getting the same thing back.
People holding raw land02
Pooled, it becomes scale.
A parcel you meant to build on. Alone it is hard to sell in a thin market. Pooled, it can be financed and developed.
Homeowners with a backyard03
Your yard, earning.
A ground lease, a removable unit and monthly income. You approve decisions, and Clear handles permitting.
Backyards are covered in full on the housing page.How backyards work
04One thing worth saying out loud
A contribution is designed to be held.
If you are looking to trade property every couple of years, this is the wrong vehicle, and we will tell you that on the first call.
Why it has to be heldAnti-abuse rules
The rules that make the deferral work also make swapping in and out every couple of years unworkable.
The window they turn onNot seven months
7 years
If you hold a portfolio rather than a property, or you are evaluating this on someone else’s behalf, Clear Capital sets out the structure.
Send us the property details