TIME TO CONSIDER SELLING YOUR MEDICAL AND DENTAL PRACTICE
As you know, timing is a very important aspect of almost everything you do in life. When deciding when to sell your dental or medical practice, timing is a critical part of the overall decision. Your financial goals, age and health all play a role when deciding how and when to retire and sell your practice. Another influencer in this decision is not within your immediate control. It is called “capital gains” tax. I am not a CPA but I am an attorney and real estate broker who helps clients buy and sell medical practices and dental practices. So please consult your individual CPA as my statements are general and may not apply specifically to your financial situation. Let me summarize more below what I am referring too.
Lets say you bought your dental office for $300,000 years ago. Over your career you have worked hard and have had much success. A few decades later your business is now worth $3,300,000. When you sell a medical practice, in general terms, you have a $3,000,000 profit. Currently, the capital gains tax on income has a range but assuming an income of over $400,000 the rate is now 20% . So on a profit of $3,000,000 the tax you would pay is $600,000. President Biden has proposed an upwards capital gains tax of 40% effective 2022! The highest in our history. That means that same profit of $3,000,000 would incur a tax of 40% or $1,200,000. In summation, you walk away with $600,000 less. Lets assume you invest that $600,000 and get 8% on your money. That’s $48,000 a year. Assuming you are 65 and live 20 more years that’s $960,000!!!!!!!!
So……….selling before the end of 2021 in the grand scheme of things could make you almost a MILLION dollars more in your lifetime. So working an additional 3-5 years could cost you almost a MILLION $$.
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