RENT Magazine Q4'23

When selling your apartment building or any real estate, there are taxes to be paid on your gains on the sales proceeds. You will pay a 20% capital gains tax, 0-13% state tax, depreciation recapture and the 3.8% Medicare tax. So, depending on where you live, taxes will range from approximately 27% to 40% and I think that’s criminal. DO NOT TRANSACT A 1031 UNTIL YOU KNOW ABOUT THE DEFERRED SALES TRUST

I am a big fan of the old Westerns—Hoot Gibson, Clay Hollister, John Wayne, Jimmy Stewart, the great Audie Murphy and so many more. I always envied them because they almost always came to the rescue to save the “good guys” from the “bad

guys.” I always dreamed of coming to the rescue, but I don’t even own a horse! But now I can come to the rescue, and I don’t need a horse. I am here to rescue apartment owners from the “bad guys”—the tax people.


The Deferred Sales Trust is based on Section 453 of the tax code, the installment sale or seller financing. The trust has a 30- year track record of successfully deferring taxes. The IRS has conducted 20 tax audits where the trust had been used, and every time, the IRS issued a “no change” letter. So, we know that this type of trust is on solid tax and legal footing. Many attorneys and CPAs don’t know about the Deferred Sales Trust and if they do, they may have some misconceptions about how they work. In many cases the Deferred Sales Trust may be a better option than a 1031 or Delaware Statutory Trust.

Here’s how a Deferred Sales Trust compares to a 1031: No 1031 requirements No 45-day period

No equal or greater debt No like-kind properties Sell today and defer taxes today Receive a 5% cap rate on the sales proceeds today Get an unlimited amount of time to buy another property when it makes more sense to buy


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