After the 2008 crash, a lot of people either lost most or all of their money and one of the biggest reasons was they were held hostage to a 1031 exchange. Even today, the conventional 1031 strategy presents many downsides, a major one being that once you sell, you have a limited timeframe before which you have to rebuy. Enter Brett Swarts, today’s guest and founder of Capital Gains Tax Solutions, a firm that offers a solution to the 1031 called the deferred sales trust. The DST offers an exit strategy that helps business owners escape feeling hostage to capital gains tax as well as venture capital to fund their next business deal. In today’s show, Brett gives listeners the lowdown on how the DST works and the many benefits it offers in comparison to the 1031 exchange. He talks about how it enables a client to sell, and then park their money for as long as they like and also reinvest it in many more asset types than the 1031 exchange allows. We hear from Brett how the DST allows boomers to preserve wealth and pass it down to the next generation, and how it can also help the US get a more liquid net worth. Brett also weighs in on the flexibility and seamless partner separation it provides in the context of syndications. In addition, our conversation covers what the DST can do to stop the dreaded 40% debt tax on taxable estates over 20 million. After hearing what Brett has to say, you’ll wonder why you even considered the 1031 exchange at all, so don’t miss this one!
Key Points From This Episode:
- Introducing Brett who offers the deferred sales trust as a solution to the 1031 exchange.
- How a DST allows you to delay a rebuy in contrast to the 1031 exchange which doesn’t.
- Brett’s service: to help facilitate the legal process that clients undergo to do a DST.
- How people often buy higher-priced properties on a 1031 exchange, getting more debt.
- Parking your money and reinvesting in any asset through DSTs.
- Traveling 1031 depreciation schedules and new depreciation schedules provided by a DST.
- How baby boomers want to preserve wealth and 50% of the USA’s net worth is illiquid.
- The flexibility of options DSTs give investors in syndications: they can take their money out.
- Reinvesting into a new syndication deal via a brand new LLC through the DST.
- Reasons for the DST asking 20% for a reserve account after forming a new LLC.
- The risk tolerance question and what options a client has with dictating where the 20% goes.
Links Mentioned in Today’s Episode:
Brett Swarts on Twitter
Capital Gains Tax Solutions
Capital Gains Tax Solutions on YouTube
Wayne Patton’s Asset Protection
Passive Income through Multifamily Real Estate group on Facebook