Deferred Sales Trust | Investing in the US Podcast

August 10, 2019


RG 168 – Deferred Sales Trust vs 1031 Exchanges: Supersize Your Real Estate Portfolio with Bret Swartz

Bret is the CEO of Capital Gains Tax Solutions and helps high net worth individuals to solve capital gains tax deferral limitations. His experience includes deferred sales trust, Delaware statute trust, 1031 exchanges, and over 85 million in closed commercial real estate brokerage transactions. He’s also a licensed broker in California where he grew up in the Bay Area. He learned Real Estate and construction from his father who was a contractor and he worked for him each summer moving bricks and working on site. His first official job was a costco in the first summer back from college and he learned the value of everyday working. 

He learned real estate by construction and hammering nails and then at college he studied business. He went into an internship to learn investment and commercial real estate while still at college and got licensed. His business how can take an investment property and trade it for a like kind investment property within a short period of time, for example 45 days to identify and 180 to close. The key component is decorporator value, so if he sold a building for $5 million then he needs to buy something for $5million or greater. If you have $2mil in debt on the next property as well, you can use tax deferment to keep rolling it over. The deferred sales trust is a manufactured instalment sale, this can be done by asking the seller if they’d carry back a note and in a traditional instalment sale they’d say yes and if you the money down and carry a note, and you’d owe tax on what you received. On a carry back you become the lender so the note is now a deferral state. So instead of selling to a seller directly, a trust comes in before close of escrow and you sell to the trust for the full amount in exchange for a zero down payment note and then turn around and sell to the buyer who was lined up. In this scenario the trust bought and sold for the same amount so then tax liability is zero, then the note you’ve received means that the seller owes you the full amount. The buyer takes ownership in a normal way so he’s free and clear and the money sits in a bank for management by a professional financial advisor.

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By Brett

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