Deferred Sales Trust | THE RICHER GEEK

October 14, 2020

Deferred Sales Trusts with Brett Swarts

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What if there’s an alternative way that will allow you to sell a property or investment property while continuing to defer your capital gains and your depreciation recapture?

That’s the topic of this episode’s guest, Brett Schwartz, the Founder of Capital Gains Tax Solutions and the host of Capital Gains Tax Solutions podcast. His company aims to help people defer capital gains tax on the sale of their highly appreciated assets, do away with the 1031 exchange, and save time so that they can create and preserve more wealth.

Brett’s experience includes numerous Deferred Sales Trusts, Delaware Statutory Trusts, 1031 exchanges and $88,000,000 in closed commercial real estate brokerage transactions. He’s an active commercial real estate broker and investor with brokerage experience and ownership in multifamily, senior housing, retail, medical office, and mixed-use properties. He is a licensed California Real Estate Broker who holds Series 22 and 63 licenses. He lives in Roseville California, with his wife, Melanie and their 5 children.

In our talk, Brett shared his beginnings, how he came up with the transformational wealth plan, how his process works, and how this alternative way of deferring capital gains is entirely legal.

In this episode, we’re discussing…

  • [02:50] Growing up in a broken family, being a barely surviving newlywed, losing everything in the 2008 crash,  and getting back up with real estate investing

  • [05:33] How Brett came up with the idea of a transformational wealth plan

  • [07:40] Why Brett started his company, Capital Gains Tax Solutions

  • [08:36] Why Delaware Statutory Trust is not the same as the Deferred Sales Trust (DST)

  • [11:10] How the “better DST” works

  • [12:34] How Deferred Sales Trust is used to give clients tax deferral, liquidity, diversification, and the ability to eliminate the need for the 1031 exchange, and buy real estate at optimal timing

  • [16:29] Some DST Rules

  • [18:29] Advice for tech entrepreneurs

  • [19:13] Why DST is different from 1031

  • [20:20] The difference of DST from self-directed IRAs

  • [23:55] Sounds good to be true, are these strategies legal?

  • [27:31] How to make a wealth plan with capital gains tax solutions in less than five hours

  • [32:39] The most massive wealth transfer in the history of the planet

  • [35:34] Why DST is transformational

Brett’s Top Tips:

  • “I did what every good entrepreneur does or person with a dream. You figure out a way to keep it going.”

  • “I set out on a journey to figure out how we can help escape our family and clients to never face this again.”

  • “How do we create more of a transformational wealth plan, not just a transactional wealth plan?”

  • “That’s honestly why we started the [Capital Gains Tax Solutions] company to help people escape feeling trapped by capital gains tax because there are multiple solutions. So that folks never have to feel trapped by capital gains tax and worse of all, lose it all.”

  • “We want to create something with optimal timing, meaning you can sell high and buy low, not sell high, and buy higher, which is what our parents taught us.”

  • “Most high net worth individuals struggle with capital gains tax for 30 to 50% of their gain. When they go to sell their high-end primary home, business investment, real estate, cryptocurrency, tech company, or whatever they’re selling, it’s highly appreciated as a capital gains tax. Guess what, Uncle Sam is your partner, and they want 30 to 50% of that gain.”

  • “We use a deferred sales trust, which is another form of an installment sale, which gives our clients tax deferral, liquidity, diversification, and the ability to eliminate the need for the 1031 exchange and buy real estate at optimal timing. So they can have a transformational wealth plan and can create and preserve their wealth.”

  • “We [Real Estate Investors] know when it’s a seller’s market, we know when it’s a buyer’s market. And the key is gapping the two and it’s a rock and a hard place for 1031 exchange investors who, who I would like to say, like Warren Buffet, when the tide goes out, you see who’s been skinny dipping.”

  • “There’s no rules in [deferred sales trust]. You can own your own property. By partnering with the trust, we have a unique way in which we do it. And you can do it all yourself and manage yourself or hire a property manager, no problem. You can have the income sheltered back into the trust, and you get a brand new depreciation schedule.”

  • “It’s the best thing for syndicators, because not only are you going to attract more wealth, but you’re gonna help them save 30 to 50% of the way in, and you can help save 30 to 50% on the way out.”

  • “It’s powerful once you start looking at the law of compounding interest and the law of arbitrage.”

  • “According to the American Bankers Association, about $17 trillion is going to pass from one generation to the next in the next 20 years. And this is by the baby boomers, and it’s known as the largest wealth transfer in the history of the planet.”

Nichole’s Top Tip:

“The reality is, as more and more people have invested in real estate during this time period, a lot of real estate has done very well. And there are going to be a lot of people that have funds that would be under that kind of umbrella.

 

Resources:

 

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