A Captive Real Estate Investment Trust (Captive REIT) is a business and tax strategy employed by large retailers and banks with substantial real estate holdings or property loans. The REIT is sold by the company to investors to hold the real estate assets that were previously on the company's books. The company then pays rent to the REIT, which it deducts as a business expense.
An installment sale is a sales method in which the seller receives payments over time and reports a portion of the capital gain to tax authorities as payments are received, thus spreading tax liabilities.
Section 121 of the Internal Revenue Code pertains to the exclusion of gain from the sale of a principal residence. It provides guidelines on the criteria and limitations for income exclusion, ensuring taxpayers benefit from tax relief on qualifying property sales.
A tax bracket refers to the range of income subject to a certain marginal tax rate. It defines the percentage of each additional dollar in income required to be paid as income taxes.
