Capital Gains Tax Solutions
Capital Gains Tax Solutions
Welcome to the Capital Gains Tax Solutions, your shot of clarity to break out of capital gains tax jail, when selling a highly appreciated asset. I'm Brett Swarts, your exclusive Deferred Sales Trust trustee.
The answer has always been "no, you can't do that". It's not like kind to exchange real estate for shares in an LLC, it's always been a bit of a challenge.
And I've always dismissed it essentially as a bunch of bunk because who knows if it's even legal.
When we got the wire from our mutual client who made this work and it was a real eye-opener to see that there are ways that people can use the regulatory framework, if properly structured to invest 1030 exchange dollars in things that you would not think. It was very impressive.
You can put it in stocks, bonds, mutual funds, hard money lending, into a business develop real estate. We just closed a deal in Alabama, $2.6 million sale, $600,000 of liability deferred and these guys were in the marketing business and they actually want to be in the multifamily development business. They're developing 80 units with the Deferred Sales Trust funds that they would have paid to the government in Tennessee. That's where they identified as a great market to develop.
An old client of yours was selling a $7.6 million property in Georgia. It was 128 units and his exchange was failing. He couldn't make sense of the numbers and COVID-19 hit. Pass his 45 day identification and Deferred Sales Trust looked to him a whole lot better. Therefore, for the first time ever, he used a Deferred Dales Trust. He put 3.1 million into this trust and the cool part was that he's like, Brett, there's a place - Praxis capital. Remember them? So a big percentage of that went with you guys. So that he was getting the 6% for him.
He doesn't really like stocks, bonds, mutual funds but he is a big on real estate. He was able to save a failed 1031 exchange, pay off all the debt and then move it into something that's a little more predictable, a little more diversified, also very passive for him. No more liability.
In 2014 we started to notice an increase in people looking at 1031 exchanges as a result of the fact that they had equity in their real estate, realizing their return on that equity was infinitesimally small. They are earning nothing, they had millions and they were earning like a half a percent on the equity, when it's sitting there in this highly appreciated real estate and then needed a way to unlock it.
Question: Can you invest 1031 exchange funds into multifamily syndication??
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