What to Do With Money After Selling Your Business

After the wire

What should you do with money after selling a business?

After selling a business, set aside the tax first, then decide how much you need to live on. Only then decide where the rest goes, over months rather than days. The sale turns what was usually one illiquid asset into cash.

Exit-planning advisers commonly estimate that 80% to 90% of an owner's financial wealth sits in the business before a sale. That estimate comes from an industry report by Lutz with the Exit Planning Institute. So the first decisions after closing shape most of the family's balance sheet.

Owners are not a small group. In 2022, 20% of U.S. families owned a privately held business, according to the Federal Reserve's Survey of Consumer Finances. Nearly half of families in the top tenth by income did.

The people around the decision matter as much as the plan. Relli co-founder and CEO Mor Milo described a CEO who invests without managing anything himself.

"He has a great CPA, he has a great financial advisor, and he relies on them heavily to ... get him the right deals and put him in front of the right investments, just like any smart business owner should."

Mor Milo, Relli co-founder and CEO, in LendAPI Partner Podcast with Mor Milo, CEO of Relli (July 3, 2025)

How long should you wait before investing a windfall?

A windfall has no required waiting period, because no rule sets one. The useful test is timing. Any money you may need for taxes, an earn-out, an escrow holdback or a new venture should not go into something you cannot sell.

Private real estate syndications commonly run about 3 to 7 years, according to Angel Investors Network, and sponsors can extend them. Money placed there in 2026 may not come back until 2029 to 2033, or later.

The tax bill

How is the sale of a business taxed?

The sale of a business is taxed on the gain, and how the deal is written decides which rates apply and when. These are general federal rules for 2026, not tax advice:

• Long-term capital gains are taxed at 0%, 15% or 20%. For married couples filing jointly, the 20% rate starts above $613,700 of taxable income ($545,500 single).
• In an asset sale, part of the price can be depreciation recapture on equipment and other property, taxed differently from the rest of the gain.
• An installment sale spreads the gain over the years payments arrive, but depreciation recapture is taxed in the year of sale. Inventory and publicly traded stock cannot use the method (IRS Topic 705).
• Stock in a C corporation can qualify for the Section 1202 exclusion. For stock issued after July 4, 2025, 50% of the gain is excluded after 3 years, 75% after 4 and 100% after 5. The cap is $15 million or 10 times basis per company. Earlier stock keeps the old 5-year, $10 million rule.

The note also changes your concentration. A seller carrying a note is now a lender to the buyer. Until the note is paid, the old business is still a large share of your wealth.

Real estate and taxes

Can real estate help with taxes on a business sale?

Real estate can help with taxes on a business sale only in narrow cases. Buying a stake in a syndication does not defer the gain by itself. Two federal rules come up most:

1031 exchanges

A 1031 exchange covers only real property held for business or investment, swapped for like-kind real property. Selling a company's stock, its goodwill or its equipment is not a real property exchange, so a 1031 does not apply to the business itself.

If the sale includes real estate the business owned, that property can be exchanged for other real property or a Delaware statutory trust (DST) interest. The deadlines are 45 days to identify and 180 days to close (or the tax return due date, if earlier). It generally cannot be exchanged for a limited partner interest in a syndication. The guide on why a 1031 exchange does not apply to a company sale covers DSTs and the limits.

Opportunity zones

A capital gain invested in a qualified opportunity fund within 180 days can be deferred. For investments made after December 31, 2026, the deferred gain is taxed at the earlier of a sale or five years. A 10% basis step-up applies after five years (30% for a rural fund). Appreciation can be excluded after a 10-year hold, subject to the rules.

IRS Notice 2026-40 says a gain realized on or before December 31, 2026 and invested on or after January 1, 2027 can use the new rules. That makes the timing of a late-2026 sale matter. The guide to opportunity zone funds has the details and the risks.

Depreciation from a new real estate investment usually does not shelter the sale either. Passive K-1 losses generally offset only passive income under IRC 469, and gain from a business you ran is not passive income.

One asset to many

Where do business owners invest after selling their company?

Business owners invest after a sale in the same things other investors use, such as stock and bond funds, cash, real estate and private funds. They add one goal: making the new portfolio less dependent on what they used to own. Real estate is one piece of that. The guide on how much of a portfolio to put in real estate covers how it behaves next to stocks.

Tech employees with large stock grants face the same one-company problem, covered in the guide to RSU wealth and real estate.

Diversifying after a sale means owning things that do not rise and fall with your old business. An owner who sold a restaurant group in one city adds little diversification by buying retail centers in the same city. The same local economy drives both. Ask how each new investment's property type and region overlap with your former company's customers and market.

How can you invest in real estate without running another business?

An owner can invest in real estate without running another business by becoming a limited partner and handing the operating decisions to a sponsor. That is one of the routes in the passive real estate investing guide.

You give up control of daily decisions, which is the point after years of making all of them. The decisions that stay with you are which sponsor to trust and how much to commit. The guide to vetting a sponsor covers the first.

The building

Should you keep the building your business uses?

Keeping the building after a sale makes you a landlord with one tenant: the business you just sold. Advisers often move the property into its own entity and lease it to the buyer. The lease terms, the rent and the buyer's success then decide what the building is worth. The rent can run for years, but it keeps your money tied to the same company and location.

Passive real estate works the other way: many tenants, a professional operator and no say in how it is run. Owners who keep the building and also invest passively hold both kinds of risk, which is worth writing down before deciding.

Investing through an entity

Can you invest sale proceeds through a holding company or family LLC?

A holding company or family LLC can invest in private offerings if it meets an entity test in the SEC's accredited investor rule. The common ones are total assets over $5 million or ownership in which every equity owner is accredited. The $5 million test applies only to a company not formed for the specific purpose of buying the offering.

A new LLC funded only to make one investment fails the $5 million test for that reason. The accredited investor requirements list every test.

The sale itself often settles the personal tests. Cash proceeds count toward the $1 million net worth test, which leaves out your home. They are also far easier to document than a private company's value.

Large checks can also simplify proof. SEC staff agreed in March 2025 that a Rule 506(c) sponsor can rely on a minimum investment, with written representations. The minimum must be at least $1,000,000 for an entity ($200,000 for an individual).

In Relli's analysis of SEC Form D data, 1,220 real estate Rule 506(c) offerings filed from October 2025 to September 2026 had a usable minimum. Of those, 23 (1.9%) set a minimum of $1 million or more.

If you keep consulting through your own company with no employees, a solo 401(k) is another way to hold real estate, with its own rules.

Ask the sponsor

Which timing questions should a recent seller put to a sponsor?

A recent seller should ask questions about timing and overlap that other investors skip.

1. Can I invest through my holding company or family LLC, and which accredited test will you verify it under?
2. My sale is still closing. What is your funding deadline, and can I commit in stages?
3. If I am carrying a seller note, when do this deal's own loans mature? Am I stacking two credit risks on the same years?
4. How do the property type and region overlap with my former business's customers or local economy?
5. What is the expected hold, and what transfer limits apply if I need cash for an earn-out or escrow?