With cell tower lease buyouts many investors want an easement to go along with the assignment of the cell tower lease. Most easements are perpetual (forever) or for a fixed period of time. Typically the longer amount of time a seller is willing to sell their cell tower lease, the more money they will receive from an investor. Therefore a perpetual easement, where allowed by state law, will likely be used in the transaction. In the state where we are located, California, the maximum easement allowed by state law is 99 years.
1. Should You Pursue A Perpetual Easement Or A Fixed Term?
It depends. Many of our clients are looking for the maximum purchase price when selling their cell tower lease, so they accept a perpetual easement deal. Other clients like the idea of having the lease rights revert back to the property owner sometime in the future. Those clients will pursue a 15, 25, or 30 year deal. The time frame of the transaction is all dependent on what makes the most sense for you – the seller.
2. Do Taxes Play A Factor With Easements?
Airwave Advisors® is not a qualified tax advisor, and we recommend you seek qualified tax advice from a trusted tax advisor when pursuing a cell tower lease buyout transaction. We have been told that perpetual or 99 year easements often qualify for capital gains tax (as opposed to the higher ordinary income tax the property owner is currently paying), however do not consider this statement regarding tax advice, please confirm with a qualified tax advisor.
3. What About 1031 Exchanges?
Depending on the current land use of your property, you can likely roll the cell tower lease buyout sales proceeds into a new property of similar or like-kind, using Internal Revenue Code Section 1031(a)(1). Specifically this language states:
[blockquote]No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.[/blockquote]
3. I Still Have Questions, How Can You Help?
Give us a call today. We have closed over $30,000,000.00 in cell tower lease buyouts, tailoring every transaction to meet the need of the seller. Perpetual easements, 99 years, 30 years, almost any amount of time can be exchanged in return for a lump sum payment to the seller. This is a unique transaction where you can greatly benefit with the help of a cell tower lease expert.
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