A Real Estate Exit Strategy That Can Save on Capital Gains Taxes

A Real Estate Exit Strategy That Can Save on Capital Gains Taxes


If you’d like to sell a rental property, business or other highly appreciated asset but are dreading the capital gains, a Deferred Sales Trust may be for you.


There are real estate strategies out there that could save you thousands of dollars in taxes, but you probably won’t ever hear about them unless you work with an experienced professional.

The Deferred Sales Trust is one of those. It isn’t well known, but it should be. Here’s how it works.

We sometimes have clients who own property for a long time, or a business or some other highly appreciated asset, and they’re reluctant to sell because of the thousands, or hundreds of thousands, of dollars they will have to pay in capital gains taxes.

They may know about the 1031 Exchange, an excellent tool that allows you to defer paying capital gains taxes on a sale by reinvesting the proceeds into a replacement property. The problem is, some people just don’t want to go back into real estate. They’ve owned property for 20 or 30 years, maybe they were a landlord, and they don’t want to do that anymore.

That’s where the Deferred Sales Trust comes in. By using Section 453 of the Internal Revenue Code, which pertains to installment sales and related tax provisions, it lets people sell a property or business, defer the capital gains tax and roll the money into investments other than just real estate.

Interested in learning more? Read the full article here.

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