As a professional serving high-income, high-asset clients, you undoubtedly are always on the lookout for innovative ways to increase their family wealth and save them money that would otherwise go to pay taxes. What if you could offer them a strategy with the following characteristics:
Deferred Sales Trust
Unfortunately, higher capital gains taxes appear to be almost a certainty in the near future. Why? Because President Biden’s $3.5 trillion American Families Plan, if passed by Congress, will raise the long-term capital gains rate from its current 20% to 39.6% if you earn more than $1 million per year.
f you’ve been keeping up with the news coming out of Washington, D.C., the past several months, you know that President Biden’s $1.8 trillion American Families Plan calls for raising the federal long-term capital gains rate from its current 20% to 39.6% if you earn more than $1 million per year. Ouch! As the owner of highly appreciated investment real estate, no one need tell you the enormous negative impact such a capital gains tax hike would have on you when you decide to sell one of these properties.
In 1963, the incomparable Bob Dylan wrote “The Times They Are A-Changin.” While his song referred to the societal and political changes occurring in the 1960s, it could just as well apply to the tax changes on the horizon today.
With the possibility of capital gains tax rates increasing in the near future, you face a risk that, when you sell a highly appreciated asset, an even larger portion of your sale proceeds will be eaten up in long term capital gains taxes. The Deferred Sales Trust (DST) to the rescue! If you’re a savvy investor, you may have used this unique, proprietary tax deferral strategy in the past when you sold a piece of highly appreciated investment real estate.