If you have a family business and you think that it is not rentable enough, maybe the best thing you can do is to change it with something else. And this can be considered a common practice in the case of small or even larger businesses from USA. The principle is called “real estate exchange” and it offers you the possibility to change your business with something else. But there are some rules that you have to take into consideration.
#1 You should change a business with another business!
This is the first important rule that you have to take into consideration. And this means that you are not allowed to use the property in other purposes such as moving there or using it as your permanent own house. But, if you are smart enough, there are some other ways of interpretation when it comes to this particular rule.
And allow us to briefly explain them to you. If you change your business with a vacation house which is used for rental, in a famous holiday destination, you are allowed to use the house, but only 50% of the time. This means that you can spend there around 6 month/ year and in the remaining time, you can rent the house for other persons. Smart, isn’t it? And our recommendation is to start looking for properties now, because this idea of business is becoming more and more popular.
#2 Avoid paying taxes!
In fact, according to experts, the main benefit of real estate exchange is that you can avoid paying some taxes. And when you have a small family business, you probably know how difficult it can be to organize your budget as to pay all the taxes. Not to mention the fact that maybe you are the owner of a property which comes with some high maintaining costs and a real estate exchange can offer you the opportunity to change it with something which proves more rentable. And when you whole family depends on that, things can be even more complicated and you will have to take the wise decision.
#3 Look for properties which have the same value as yours!
If you cannot find a property which has the same value as yours, you can ask for extra money from the owner, also without being necessary for you to pay the tax. But be careful because you should use the money for renovating the new property that you receive or to build an additional construction for it.
On the other hand, bear in mind the fact that you will not necessary have to change your business place with the same type of business. For example, if you have a ranch and you want to exchange it with a bakery, you can do so. But you will have to reach the same conclusion with the new owner and to avoid conflicts.
#4 Find someone to help you!
In this case, you will have to ask for the services of a company that deals with real estate exchange. It is much easier that way and you will also get rid of stress. Just imagine how it would be like to gather all the documents for such thing.