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Not really sure these work but some idea's you can check into further.

1a.) Aunt sells the property on a note to nephew. If she doesn't need the money right away and would be just as happy with an income stream she could say $7k down and $500 per month for 15 years with no prepayment penalty (approx 5% interest). I believe long term capital gains (15% federal) will be owed on the principal part of the payments and income tax rates on the interest part but since she is getting them over time that really isn't such a big deal. Besides this seems to me to be what is really happening.

1b.)Actually if her tax rates are significantly less than his and he wants to hold the property long term it might behoove them to raise the interest rate and lower the selling price in order to maximize write-off for him. Example purchase price $50k with $5k down and payments of $500 over 15 years equals 10.6% interest rate. However in this case there would need to be some prepayment penalty (maybe 20k in the first 5 years, 10k next 5, 5k last 5). More complicated and harder to explain this way. 1a is probably better for most people.

2.) Aunt transfer property into a trust, value 70k. Trust sells property to nephew for 70k and invests in the market, bonds or whatever she wants. Aunt gets perpetual annuity like payments from the trust which will be partly capital gains tax and partly income tax rates. The main benefit vs. option 1 is the aunt gets to invest the entire 70k elsewhere immediately instead of having to carry the loan. One problem with this I can see right away is the amount is probably to low to warrant the fee's (3-5k?) it will cost to set up the trust.

3.) Aunt gifts 15% of property to nephew each year. Nephew gifts $10,500 to aunt each year. Not sure this one is legal. This would take 7 years to transfer and could run into problems in an audit. If their is a neice and uncle also in the picture each could gift 15% and $10,500 per year respectively cutting the time involved down to 4 years (well really as little as 3 years and one day).

4.) Aunt sells property to nephew and 1031 exchanges it into a TIC (typically make about 7% per year on your money in perpuity). Nephew gets his own loan or apys cash. Tax continues to be deferred for Aunt.

Personally I lean towards 1a. However, you need to contact a tax professional before doing any of the above. Asking on the tax strategies board might be worthwhile also.
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