Deferred sales trusts have been around for a while, yet many property owners with high-value assets are still reluctant to take advantage of them. As tax strategists and financial advisors often have differing opinions, you might hear competing perspectives about whether a DST is legal and beneficial. We want to set the record straight so you have the necessary information to determine whether a DST is right for you.
Deferred Sales Trust
What You Need To Know About a Deferred Sales Trust
A Deferred Sales Trust is an innovative legal tax strategy that allows you to defer capital gains taxes on selling highly appreciated assets. It’s growing faster than any other tax mitigation strategy in the U.S. If you plan to sell a business, real estate investment or cryptocurrency, you will likely face substantial capital gains taxes on your federal returns. A DST can help you avoid paying capital gains taxes immediately and save you money in the long run.
IRC 453 Installment Sales: Can the DST still work if the Seller is doing a Seller Carry-Back note directly with the Ultimate Buyer? Part 2 of 2
Yes, the seller may incorporate both a Deferred Sales Trust and a direct seller carry-back with the ultimate buyer. Both techniques are governed by the same IRS Code (IRC 453) and both allow the Seller to defer taxes until periodic installment payments are actually received.
IRC 453 Installment Sales: Understanding the Tax Implications – Part 1 of 2
An installment sale is a type of sale in which the buyer pays the seller in installments over time, rather than in a lump sum payment. In the United States, these sales are governed by Internal Revenue Code (IRC) Section 453, which outlines the tax implications of installment sales for both buyers and sellers.
Do You Have Control Over a Deferred Sales Trust?
If you invest in real estate property or other high-value holdings, you may owe the federal government and your state capital gains taxes if you sell the property and profit from it. These taxes can significantly reduce how much you benefit from the sale. Furthermore, gains not secured in a trust are subject to probate if you hold them in your estate to pass on to your heirs.