The Complete Solution for Deferring your Capital Gain
The Deferred Sales Trust™ (DST) offers an ideal solution for individuals who are looking to sell an asset that has significantly appreciated in value – a business, corporation, or investment in real estate.
Would you still own the property, business, or other assets if you take the capital gains tax problem off the table? Invest in your future with the Deferred Sales Trust – a legal strategy to defer capital gains taxes for a business exit strategy, 1031 Exchange Alternative or Rescue and IRS Compliant Strategy.
A Deferred Sales Trust is a smart and legal way to defer capital gains tax and reduce the overall tax burden on the sale of homes, commercial real estate, businesses, and other highly appreciated assets.
A DST offers an alternative to a 1031 exchange, providing more investment options without the like-kind reinvestment conditions and timeline restrictions. The DST is also an option for a failed 1031 exchange. A Deferred Sales Trust offers benefits for reluctant sellers, including reducing the risk and burdens associated with ownership, diversifying a portfolio, and preparing for retirement.
Introducing the Deferred Sales Trust™
The Deferred Sales Trust, or DST is a legal, proven, and IRS-tested tax strategy designed to help Sellers of highly appreciated assets to defer the ordinary income taxes and capital gains taxes over a period of years instead of paying them all in a lump sum. The Deferred Sales Trust gives the Seller/Taxpayer the ability to control their capital gains tax exposure, reinvestment terms, and installment payments made from the trust.
Advantages of a Deferred Sales Trust
There are significant benefits in electing to use the Deferred Sales Trust when selling a property or capital asset. These include:
Retirement Income
Provides a stream of income that can be used as retirement income.
Estate Tax Benefits
May accomplish an “estate tax freeze” for estate tax purposes.
Does Not Compete with Charitable Remainder Trust
Nothing is required to be given away to charity, as happens with the competing strategy known as a Charitable Remainder Trust.
Probate Avoidance
Avoid probate with proper estate planning.
Eliminates Risks Associated with Ownership
By utilizing the DST installment arrangement, you can convert the collateral security for your payments from an asset that is otherwise “exposed” or liability prone (e.g. your old business or property) to a “no-liability” asset (such as diversified financial instruments).
Tax Deferral
When the appreciated property or capital assets are sold, capital gains tax on the sale is generally deferred until the Seller (Taxpayer) actually receives the payments.
Maintain Wealth
When properly structured, the principal inside the subject installment sales note can be preserved with “interest only” or partial principal payments creating the potential to pass on a large portion of the note principal to your legal heirs with proper estate planning.
Portfolio Diversification
The DST Trustee may invest in REIT’s, bonds, annuities, securities or other “prudent investments” that are suitable to help assure the Trustee’s performance in repaying the Seller/Taxpayer pursuant to the held installment sales.
Legal, Tested, Proven Tax Strategy
- Developed over 27 years ago
- Successfully transacted over 4,000 DST transactions totaling hundreds of millions of dollars
- 16 field audits by the IRS all resulting in “No-Change” Letters
- 3 Formal IRS reviews – No adverse findings
- Reviewed by FINRA and SEC with no adverse opinion – Allows broker-dealers to approve their advisors to participate in the DST Strategy for clients.
- Our tax attorneys provide Audit Defense at no additional cost
Case Study Scenarios
Primary Residence Sale Scenario
Investment Property Sale Scenario
Further Reading
Case Study: How the DST Helped June and John Preserve Their Family Wealth
Real Estate and the DST: Should You Sell Your Investment Real Estate Now?
The Risks and Disadvantages of a 1031 Exchange – And How the DST Can Eliminate Them
Ready to Get Started?
DST Analysis Questionnaire
Click to take our DST Questionnaire
*Minimum Viable Transaction
When considering selling an appreciated asset, if the expected tax liability without any particular planning would cost $150,000 or more in taxes, then the DST should always be considered. Said another way, if the amount of the gain or profit that will be taxed on is at least $450,000, then YES you should look into the DST.