Turning a Tax Bill Into a Strategic Advantage
How One Sale Preserved $226K—and Bought Back Control
Investor: Michael R. (name redacted for privacy)
Profile: 50s, business owner
The Sale That Should Have Felt Like a Win
Michael had done everything right.
He bought well, held patiently, improved the asset, and exited at the right time. When the property closed at $1,050,000, it looked like a textbook success.
Then the tax projection arrived.
Instead of relief, he felt a knot in his stomach.
The Tax Shock No One Prepares You For
After years of depreciation and appreciation, the math told a different story:
Adjusted basis: ~$238,000
Without planning, the estimated tax exposure looked like this:
Depreciation recapture: ~$65,500
Federal capital gains: ~$95,300
NIIT (3.8%): ~$28,000
State taxes: ~$36,900
Nearly $226,000—gone before reinvesting a dollar.
“It didn’t feel like success anymore,” Michael said.
“It felt like I was being punished for doing well.”
Why the Tax Bill Was Only Half the Problem
Paying the tax wasn’t just about writing a check.
It would have forced Michael to:
Reinvest with significantly less capital
Take on more risk to replace income
Stay actively involved when he wanted flexibility
The real question became clear:
How should my capital work for me now—not how it worked ten years ago?
The Smart Pivot
Instead of rushing into another hands-on deal, Michael repositioned his equity using a 1031 exchange, preserving his capital and redesigning his portfolio.
The New Allocation
He diversified across professionally managed assets:
Multifamily: $400K
Industrial / logistics: $300K
Medical office: $276.5K
The goal wasn’t speculation.
It was durable income, reduced concentration, and freedom from day-to-day management.
The Outcome
The shift delivered immediate clarity:
Tax deferred: ~$226K preserved
Blended annual yield: ~5.5%
Projected income: ~$53,700/year
Active management: Eliminated
Portfolio risk: Spread across assets and markets
Michael summed it up this way:
“I didn’t just fix a tax problem. I finally aligned my investments with my life.”
Facing a major tax event or upcoming sale? Book a discovery session to explore how your exit could become a strategic reset—not a setback.
"Taxes don’t have to be a penalty—they can be a pivot point."