WEALTH FORMULA EPISODE 170: HOW TO DEAL WITH CAPITAL GAINS TAXES!   Is this market hot? Are real estate and […]





Is this market hot? Are real estate and equity prices too high? Invariably you are hearing this left and right these days. In fact, I can honestly say that I have been hearing that for at least the last three or four years.

My initial response to the impending zombie apocalypse was to stop deploying capital. That was a mistake. While those of us listening to Chicken Little sat on cash a few years back, other investors made money hand over fist.

So who’s to say that that people sitting on cash three years from now won’t be saying the same thing? It is very difficult to time the market.

So, what do you do? If you lose money by not deploying cash and letting inflation eat away at it and if you are worried about deploying capital into an over-heated market, what’s left to do?

Of course there are options like building up cash in Wealth Formula Banking that may make sense for cash accumulation that is very conservative. However, another simple concept is to be selective of where you deploy capital!

For those of you in Investor Club, you know that I am deploying capital heavily right now. Why? Well, the projects we are doing are not of the “buy and hope” variety. We are buying heavy value add properties and budgeting significantly for capital expenditures.

We are not relying on market appreciation to increase the value of properties, we are creating value through forced equity. In doing so, we effectively deleverage ourselves and perpetually de-risk our assets.

Am I afraid of an oncoming recession? Not really. A recession is part of the business cycle. We just happen to be in the longest economic expansion in the history of the United States. I fully expect a recession in the next few years. But a recession does not necessarily mean zombie apocalypse. We used to have recessions all the time that people barely noticed.

Despite my belief that a recession will happen sooner or later, I am also of the belief that the next decade will be one of prosperity along with a fair amount of inflation. That long-term perspective helps me to focus on the idea of buying high quality assets in good markets and the creation of equity through value add strategies. Even if the economy slows and markets correct a bit, I consider this is a pretty solid approach and superior to sitting on cash that simply erodes in value over time.

Now, I should point out that when times are good like they are now, it is also not a bad idea to take some profits off the table. If you were lucky enough to invest in real estate over the last five years, you look like a genius right about now—even if all you did was buy and hope.

Selling a business is a pretty good play as well given private equity’s on-going quest to find yield wherever they can.

Whether you’re selling a business or real estate, liquidity events can be very exciting. The idea of a big lump of money headed my way always puts a smile on my face. But one of the things you have to think about before it gets to you is how you are going to keep as much of it as you possibly can. If you don’t, the tax man will be happy to take some of that big wad of cash out of your hands.

Unfortunately, most people having liquidation events have little knowledge of all of the potential options that they have to defer taxes. In fact, there are multiple strategies to do so and my guest on this week’s Wealth Formula Podcast is here to tell us exactly what they are.

Don’t miss it.

Deferred Sales Trust | Wealth Formula Podcast

Brett Swarts is the CEO of Capital Gains Tax Solutions and every year equips hundreds of business professionals with the Deferred Sales Trust tool to help their high net worth clients solve capital gains tax deferral limitations. His experience includes numerous Deferred Sales Trust, Delaware Statutory Trusts, 1031 exchanges and $85,000,000 in closed commercial real estate brokerage transactions. He’s an active commercial real estate broker and investor himself with experience and holdings in Multifamily, Senior Housing, Retail, Medical Office and Mixed-Use properties. He is a licensed California Real Estate Broker and holds series 22 and 63 licenses. He is formerly an associate at the largest Commercial Real Estate Brokerage firm in the country and has years of experience and hands-on training from some of the best in the business.





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