Compass South Bay Area Realtor used a ‘Deferred Sales Trust’ to pave a road to sell her rental without needing a 1031 Exchange.

August 05, 2021
Toni & Ed Lugwig Closed Deal Story

Living Your Best Life: Capital Gains Tax Solutions 

Compass South Bay Area Realtor used a ‘Deferred Sales Trust’ to pave a road to sell her rental without needing a 1031 Exchange.

by Brett Swarts founder of Capital Gains Tax Solutions, LLC

Toni & Ed Lugwig Closed Deal Story

Toni Ludwig and her husband bought their first home for $166,000 in 1984. Who would have guessed that 37 years later, the value would have risen to $2,750,000. Toni, who has been a Realtor for over 35 years and still works for Compass, saw a fantastic time to sell because of the record low inventory and cheap mortgage rates. Decades of real estate sales experience paired with an ongoing commitment to excellence and continued quest for education has kept Toni in the forefront of knowledge, enabling her to exercise the highest standards of professional and ethical care for her clients. 

 

While she spends the most of her time assisting clients with real estate transactions, this time she and her husband were looking to sell their property and retire from being landlords. The biggest stumbling block was capital gains tax, which was estimated to be roughly 40% of their profit. This was computed by adding the following to their $2,750,000 profit:

State of California capital gains tax rate 13.3%.
Federal capital gains tax rate of 20%.
Medicare tax of 3.8%.
Depreciation recapture of approximately 3%.

Total combined around 40% of $2,750,000 = $1,100,000 in tax liability 😬

Toni and her husband were not ready to sell if it meant a $1,100,000 tax bill at the close of escrow. In order to live more of ‘their best life’ which meant selling their property they decided they needed to defer this capital gains tax, and unlock the $1,100,000 in equity.

“This was the most logical choice. My husband and I were undecided about selling before meeting Brett and learning about the Deferred Sales Trust. It didn’t make sense to pay $1,100,000 in taxes, and we didn’t want to start again with new toilets, trash, and responsibility through a 1031 exchange. It also didn’t seem prudent to do a 1031 exchange and buy a new house in what is perhaps the most valuable market in the country” Toni said.

To solve their tax problem Toni and her husband decided to work with Brett Swarts of Capital Gains Tax Solutions in June 2021 to complete a Deferred Sales Trust.

“About a year ago, Brett called me on one of my Silicon Valley real estate listings and sent me some information on the Deferred Sales Trust. I frequently receive calls like this from other businesses requesting that I offer their service to my clients; but, most of the time, it’s not worth the trouble. Brett was different since he approached this from a Realtor perspective and the service was focused on capital gains tax liability. I must admit, at first, I felt the Deferred Sales Trust sounded too good to be true. It’s incredible to think that the Deferred Sales Trust has assisted thousands of people in deferring capital gains tax on the sale of their primary residences and investment properties for over 25 years. I’m looking forward to working with Brett Swarts to provide a tax deferral tool that will allow me to enjoy my retirement years by boosting my monthly cash flow and rolling this out to my entire network.” Toni said. 

Do you want to sell your home in the South Bay? Toni Ludwig is the Reatlor to see. She plays to win for you as a top performer! Put Toni’s 35 years of experience, as well as the knowledge of the Deferred Sales Trust, to work for you so you can continue to “enjoy more of your best life” for decades to come.

 

Deal Highlights, Stats & Life Transformation:

  • Original purchase price of $166,000 – depreciation made the basis $0
  • $2,7500,000 gain
  • 40% capital gains tax rate – state of CA + Federal + Medicare Tax + Depreciation Recapture = $1,100,000 approximate tax liability 
  • Desire to sell and be done with active real estate ownership + increase cash flow
  • Deferred Sales Trust helped her and her husband defer $1,100,000 and provides transformational amount of equity to invest and live off the cash flow.
  • Chance to double retirement income.


It might be difficult to sort out capital gains tax deferral strategies. It’s also difficult to discover a tax deferral technique with a proven track record that provides debt relief, liquidity, diversification, and the option to move cash outside of your taxable estate without using a 1031 exchange. That is why we launched Capital Gains Tax Solutions and offer The Deferred Sales Trust (DST) so you or your clients never have to worry about capital gains tax or a 1031 exchange again when selling any asset, whether crypto currency, a primary residence, investment real estate, or a business. Get a better understanding of the distinctions between each tax deferral method you’re thinking about today; including the Delaware Statutory Trust, Charitable Remainder Trust, 1031 exchange, Opportunity Zones and learn more about The Deferred Sales Trust™ (“DST”) today by downloading a free e-book, Sell Your Business Or Real Estate Smarter here at http://www.capitalgainstaxsolutions.com. Here is a video of Shark Tank’s Kevin Harrington talking about selling public stock and frustrations with capital gains tax  deferral options. Want to learn more? Read about more Advantages of The Deferred Sales Trust™ (“DST”) in a recent article here

About Brett Swarts:

Brett Swarts is recognized as one of the most knowledgeable and informative experts on capital gains tax deferral and Deferred Sales Trust™ (“DST”). His audiences and clients are challenged to design and implement a tax-deferred transformational exit wealth strategy using the DST in order to create and preserve more wealth.
Brett is the Founder of Capital Gains Tax Solutions and host of the Capital Gains Tax Solutions podcast.  He’s also a seasoned commercial real estate broker with eXp Commercial with expertise in the sale of investment properties, 1031 exchanges, and Delaware Statutory Trusts. Each year, he provides the Deferred Sales Trust to hundreds of high-net-worth clients, luxury agents, and other business professionals.

 

 

By Brett

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