This is by far, one of the most pressing and important questions we often hear. And we get it – it is, without a doubt, a very big decision. But for many, it is the right decision, as it provides greater control of assets and most importantly, a more stable future for landowners.
If you are a landowner, consider these top five reasons why selling could be the right decision for you:
Immediate Cash Payout:
You can reduce interest and inflation risk by receiving a cash payment now, instead of waiting for annual or monthly payments over the remaining life of your lease. You can also decide if you want to sell all or a portion of your land rentals or royalties.
Reduce Your Income Taxes:
Rental or royalty income is taxed at your ordinary income tax rate (currently up to 37%). By selling your rental or royalty income now, your proceeds can be treated as long-term capital gains and taxed at a current rate of 15-20%, based on your income level. Additionally, the transaction can be eligible for a 1031 tax-free exchange. (As always, consult your own tax, legal, and accounting advisors before engaging in any transaction.)
In addition to a 1031 eligible investment, you can diversify your investments into different asset classes, many with higher rates of return than your remaining lease payments.
Simplify Estate Planning:
Settling wills and estates can be a long and frustrating process for your heirs. Cash assets are easier to distribute. Cash distributions can easily be made during your lifetime, allowing loved ones to enjoy the benefits sooner rather than later.
Lease Cancellation, Site Decommissioning, and Risk Mitigation:
Did you know? Your lease gives the wind or solar facility operator the right to shut down the facility at any time and end your rental or royalty payments. Taking the lump sum cash payment upfront eliminates that risk, and sets you up for long-term success.
At Renewa, we provide capital solutions to landowners and project developers, purchasing renewable energy land, leases and royalty income. This vital role helps accelerate the development of renewable energy assets while ensuring landowners reap the greatest value from their land. For more information, or to start a conversation – reach out today!
Have more questions? Email us at email@example.com!