Tax strategists are buzzing more and more about Deferred Sales Trusts as flexible alternatives to a 1031 exchange and valuable estate planning tools. A DST could defer capital gains tax obligations indefinitely, while producing cash flow, on the sale of any appreciated asset, not just real property.
The New York Real Estate News reported that the marketplace where lenders sell mortgages on office buildings, rental properties and other types of commercial real estate has ground to a halt as traders try to figure out how to price in risk amid the COVID-19 pandemic. Possible Impact to Real Estate 1031 Exchanges We are …
In previous articles, we have discussed how the Deferred Sales Trust (DST) is a specialized form of Installment Sale under IRC 453. Under an installment sale to a DST Trust, the entire course of the transaction and its continued operation revolves around a secured installment note in favor of the Seller. The term ‘secured’ means …
Generally, the terms of note will be Seller driven and the resulting terms must be reasonable and commercially viable. The initial term we would offer would be anywhere from 1 year to 10 years… Seller picks their desired term. The payback structure is very flexible in that the seller could: defer receiving payments for up …
Read moreHow Do You Structure Repayment Terms for a Deferred Sales Trust Installment Note
Bifurcated Exchanges into a 1031 Exchange and a Deferred Sales Trust with the possible use of a Delaware Statutory Trust for the 1031 Exchange Upside Replacement Property The usual 1031 jargon is “up in value, up in loans”. In a bifurcated 1031 exchange you are doing 2 transactions- (1) a 1031 exchange and (2) a …
Read moreBifurcated Exchanges into a 1031 Exchange and a Deferred Sales Trust
It is not uncommon for friends or family members to pool their resources together to invest in Real Estate. Often times they employ a strategy where they systematically use a vehicle known as a 1031 exchange to reinvest in more valuable properties using tax deferral to allow their assets to grow more quickly. As with …
Many people who own or would like to own investment real estate may be familiar with the abbreviation “DST.” It is entirely possible that they could be exposed to two differently described DSTs and wonder if they are one and the same, or is one possibly a variation of the other. The difference between a …
Read moreThe Tale of Two DSTs – Delaware Statutory Trust vs Deferred Sales Trust
1031 Exchanges and Deferred Sales Trust™ are both based on the structuring of sales transactions to avoid actual or constructive receipt of the immediate sales proceeds by the seller. Used as a backup strategy, the Deferred Sales Trust™ preserves tax deferral when the seller cannot successfully complete a 1031 Exchange or does not wish to …
Read moreUsing the Deferred Sales Trust™ to Rescue a Failed 1031 Exchange
Why Should You Consider the Deferred Sales Trust? If you are considering the sale of a business, corporation, or investment real estate, you may face capital gains tax associated with that sale. For the investor who does not want to continue holding investment property or remain in the same business, a Deferred Sales Trust should …
By Greg Reese, Principal Reef Point, LLC Certified Trustee for the Deferred Sales Trust The DST starts with an owner of an appreciated asset who wishes to sell that asset and defer taxes on his or her gain. In order to defer the gains on the sale, the seller/taxpayer must engage with the Estate Planning …