A long time and second generation client of Rockland Trust’s Investment Management Group (IMG) opened a Premier Banking Portfolio Secured Line of Credit to avoid paying capital gains taxes from appreciated asset sales. Instead they generated tax efficient liquidity from the line of credit and became “cash buyers” of residential real estate property for their daughter. In this highly competitive residential sales environment, the time required for mortgage financing would have prevented the purchase. Our clients were successful in their purchase strategy!
Our first time home owner will now get traditional mortgage financing within a more suitable timeframe and proceeds from the mortgage will be used to cycle out of balances on her parents’ new Premier Portfolio Secured Line of Credit.
We recently sat down with a new IMG client that was interested in developing a gifting strategy for their children and grandchildren as an important part of their longerterm wealth management plan. Instead of liquidating their investment securities to fund the gifting strategy, they opened a Premier Portfolio Secured Line of Credit and in doing so avoided paying high capital gains taxes and interrupting their long-term financial goals. Our client leveraged the historically low interest rate environment and is paying interest-only payments over time.
Converting a traditional IRA to a Roth IRA can be a beneficial solution for some that wish to pay taxes now and to get the benefit of tax-free withdrawals at a later date. Estimating your tax rate in retirement is a key determinant when considering an appropriate solution. For our client, the long term benefit in converting to a Roth IRA given their current tax bracket, was more favorable, despite the tax bill owed from completing the conversion, the following tax season. In this conversion there was a sizable tax bill due, but instead of taking another withdrawal from their IRA, or incurring capital gains from their taxable investment portfolio to cover the costs and having yet another tax event in the future, our client borrowed against their Premier Portfolio Secured Line of Credit to pay the taxes owed. In so doing, they paid interest-only payments over time and kept their balance outstanding as they determined the interest rate on the line to be an attractive form of debt. This fast and efficient access to cash helped in their income tax bill deferral strategy all without disrupting their long-term investment strategy.
IMG business owner clients and real estate property owners have found the Premier Portfolio Secured Line of Credit to be a helpful tool in paying down the capital gains taxes incurred after a sale. With a portfolio secured line of credit in place, upon selling your business or real estate property you can borrow against the line to pay down the capital gains taxes over time versus in one lump sum. The portfolio line of credit gives you cash when you need it, comes with a low interest rate, and allows your Investment account to keep growing without disruption.
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