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.
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.
If you’re one of the nation’s 73 million baby boomers at or very near retirement age, you may well have highly appreciated assets, such as real estate or a business, that you want to sell to help fund your retirement. The problem, however, is the potentially enormous capital gains taxes you face if you dispose of these assets via a conventional sale. Unfortunately, these taxes could eat up over half of your sale proceeds.
In past posts, we’ve answered numerous “big” frequently asked questions about the Deferred Sales Trust (DST), such as the following: