Josh Curtis, CEO of EQB speaks with Greg Reese, CEO of Reef Point and DST Trustee on the Deferred Sales Trust. A lesser known but powerful modern strategy for deferring capital gains taxes, the Deferred Sales Trust (DST), employs an innovative tax strategy to defer capital gains tax and preserve wealth.
As a high net worth individual, you likely are all too familiar with capital gains taxes. These taxes that you pay when you sell a highly appreciated asset such as a business, commercial property, investment, collectible or even your personal residence, can wipe out much of the profit you make. But what if there were a safe and legal way for you to defer your tax liability?
As a CPA helping high-asset clients create and maintain their wealth, you hold an exceptionally prestigious, albeit challenging, position. You’re the expert to whom they look to help them maximize their profits, minimize their tax liability and shield them, to the greatest extent possible, from IRS audits. But how do you do this, especially in light of the major tax changes likely coming in the near future? The Deferred Sales Trust (DST) may be just the answer you and your clients are looking for.
Savvy investors have been using the Deferred Sales Trust (DST) for over 25 years as a way to defer recognition of their long-term capital gains when they sell a real estate investment, business or other highly appreciated asset. President Biden’s proposed tax plan, however, make the DST even more valuable.
If you’re a professional who represents high net worth clients, you know that capital gains taxes constitute one of their main challenges when they sell a highly appreciated piece of investment real estate or a business. Today’s long-term capital gains rates are 15% for taxpayers filing jointly who make between $80,001 and $496,600 per year. For those making $496,601 or more, the rate increases to 20%. In some circumstances, they may owe an additional 3.8% on the lesser of their net investment income or the amount by which their modified adjusted gross income exceeds the statutory threshold based on their filing status.