Idaho Urologic Facilitates Partner Buy-in After Answering Tax Issues
Using the same abundance of caution approach that they employ with their patients, the doctors that comprise Idaho Urologic Institute in Boise, Idaho were looking for the most effective and safest method to ease the integration of new members into their real estate.
CMAC had recently secured non-recourse financing for the group at a rate that was substantially improved from their previous financing and with a loan-to-value that would allow the group to pull out cash and reduce the equity piece to a manageable number for new partners. That said, the partners were concerned over the tax implications on any cash that they received as a result of the refinancing. The group turned to its CPA who provided a clear answer that allowed the group to proceed with its plan to strip out equity with the refinance. The bottom line is cash that resulted from the refinance would continue to be tax deferred under the conditions detailed but money received as a result of a sale of a partner’s portion to a new partner would be taxable.
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