Estate Planning for Negative Capital

A solution for owners of real property subject to debt that exceeds basis


Clients with long-term real estate holdings often have negative capital, which results from cashing out with refinancings and from depreciation. The body of estate-planning literature contains few works that do justice to the central estate-planning considerations for holders of real estate with negative capital—debt in excess of basis.
Typically, the fact pattern arises when a taxpayer holds real estate long term, employing

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