Yachts, Jewels, Stocks, Trade –
Buying Real Estate With Tangibles
By Karen Evans
We all know the traditional methods of purchasing real estate, but you may not realize real estate can also be purchased for tangibles – such as boats, jewelry, trades of other real estate, and foreign and domestic stock portfolios. Here are just a few options for acquiring REAL property in this manner.
Trading Real Estate
A few years ago, I had buyers wishing to purchase an oceanfront town home in Highland Beach, Florida, for $2.5 million, but they needed to sell their home on the Jersey Shore prior to executing an offer. Fortunately, their property was also valued at a similar price. I discussed my buyers’ dilemma with the listing agent for the Highland Beach property and, much to my surprise, he said his sellers may be interested in an exchange. I quickly drafted a proposal for both sellers and within 24 hours, we were moving forward on an even exchange of the two properties. All I had to do was to locate an attorney well versed in this process and sort out how the respective realtors would be compensated and we had a deal that made everyone happy.
A Yacht-Size Exchange
I once had a buyer who was living on his yacht. Cupid paid him a visit, he fell in love with the woman of his dreams and, you guessed it, she wanted a home. She didn’t mind living on the water, but the venue had to change. I found them a lovely waterfront home where the owner would accept the exchange of the yacht and a bit of cash. Voila…we had a deal! Wedding bells were ringing and the original homeowner began enjoying that yacht he always wanted.
In my research, I found another very interesting scenario in which a multimillion-dollar home was exchanged for both cash and diamonds. The sellers were happy because they were able to sell a home they were no longer using in exchange for tangibles that they would use and enjoy more than the home. The buyer, a prominent jeweler, was happy because he could provide a larger and more luxurious home for his family and all he had to give up was some of his diamond inventory to make up for the difference in cash in order to close. This became a win-win.
Foreign Nationals & Stocks
I reached out to Alan Krinzman, a prominent Miami real estate attorney with Assouline & Berlowe. Alan has had a number of dealings with foreign nationals. He shared some very interesting experiences with me relative to foreign nationals buying real estate in the United States.
“Foreign buyers of real estate in the U.S. sometimes choose to buy the shares of a U.S. company that is the registered owner of the real estate, rather than directly taking title to this real estate in their own name,” said Krinzman. “This is done for many reasons. Here are three: mnimization of estate tax, a way to assure transfer of ownership of the property to other family members, and reducing liability to third parties.
“A popular variation on the first scenario is for the stock of the U.S. company owning the U.S. real estate to in turn be owned by a company registered in a foreign country,” Alan continued. “This is done when that foreign country more strongly protects the identities of the shareholders who own stock in companies registered in that country or does not require any information at all about the shareholders of companies that are registered there. This second option is especially popular with foreign buyers of U.S. real estate who are concerned about the threat of kidnapping if it becomes known through U.S. records that the foreign buyer has assets in the U.S. And this second scenario (if executed properly) also greatly reduces the tax rate that is applied to income produced by the real estate while it is owned and when it is sold.”
These are just a few examples of utilizing your tangibles in exchange for real estate. The possibilities are almost endless if you hire a great attorney and a clever realtor. Of course, you should always check with your financial advisers before attempting these and other methods for buying and selling real estate. Happy hunting!
Karen Evans is a Broker Associate for
Signature International Premier Properties
in Palm Beach County