How to Sell Businesses with Real Estate

A Business that includes real estate is usually attractive to potential buyers because owning the property that the business sits on prevents the buyer from worrying about a lease expiring in the future. Of course, selling a business with real estate also increases the value of the business. Potential buyers may find financing easier if there is real estate that can be used as part - or all - of the collateral for financing.

If you are selling a business with real estate, begin by getting a copy of the latest survey that was done on the property. A survey should have been prepared when you first bought the property. Depending on when the last survey was done, you may want to get a new survey as well as have the property, including all structures on the property appraised. This would help you establish the current fair market value of your property.

Your potential buyers will be looking at the property to determine if repairs or improvements are necessary. You may consider making some repairs to increase the value of the property before advertising your business for sale. Potential buyers will want to know the costs involved to maintain the buildings and the land. Be prepared with this information, which you can calculate by looking at your past receipts for maintenance.

When you are considering selling a business with real estate, you should consult with a tax attorney, or other tax specialist, in order to minimize the taxes resulting from the sale. New tax issues may come into play when business real estate is sold.

Under IRS Code Section 1031, if you exchange (sell) business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized. This would save you money by allowing you to defer capital gain taxes indefinitely. You should note that if you receive other (not-like) property as part of the exchange, that portion of the exchange is considered a gain and is subject to taxation - no loss is recognized in this instance. Section 1031 does not apply to exchanges of inventory, stocks, bonds, notes, or certain other assets. A tax professional can help you decide how to handle the proceeds of the sale, for the best possible tax advantages.

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