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Articles : Estate Planning for Negative Capital

Estate Planning for Negative Capital

By: Stephen M. Breitstone

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Clients with long term real estate holdings often have negative capital, which results from chasing out with refinancings and from depreciation.  The body of estate-planning literature contains few works wthat do justice to the central estate-planning considerations for holders of interests in real estate with negative capital — debt in excess of basis.

Typically, the fact pattern arises when a taxpayer holds real estate long term, employing leverage that generates deductions and/or tax deferred proceeds on non-recourse financings….