Options for Deferring Capital Gain Exposure

all of these options involve some sort of exchange, but not all involve direct management of assets, so income generated would be considered to be ‘passive income’.

Multi-unit Fourplex Real Estate Sacramento Placer El Dorado

  1. The first one is of course, a standard 1031 (IRS) exchange. This would require you to exchange into other real property; that could be vacant land or possibly other types that do not require direct owner oversight.  A reverse 1031 exchange is a vehicle in which you can still defer gain in the event you locate your acquired property prior to liquidating your relinquished property.
  2. The second one is a 721 (IRS) exchange, which allows you to exchange into various forms of REITS.
  3. Third is called a Deferred Sales Trust.  It is disputed in some tax-deferral circles, as not being a valid tool that the IRS accepts. We have no experience with it, so no opinion is rendered.
  4. Next is referred to as a DST (Delaware Statutory Trust).  We have a client who sold several investment properties and exchanged into partial ownership of 12 properties through his DST.  He continues to be EXTREMELY happy with his decision in going this direction.
  5. Fifth is a TIC (Tenants in common).  It has similar properties to a DST, but there are pros and cons to each one.

If you require more detailed information on any of these options, please contact Deena at [email protected] or 916.300.9310

Hi Deena,

I am writing this letter to relay my experience thus far with the investment vehicle we have spoken about many times, Delaware Statutory Trust, known as a DST.

In 2018, when I sold my downtown Sacramento apartments, I was naturally concerned about my potential capital gain exposure.  At that time, I was introduced to Jeffrey Bangerter of Bangerter Financial Services.  Jeff helped me find a solution for deferring the gain that has proven to be an ongoing good fit for me.  My goal at this time in my life is to continue to realize a great return from my real estate holdings, while at the same time never having to worry about backed-up plumbing, non-paying tenants or the myriad other issues that come with the responsibility of owning and operating rental properties..  Your other clients may already have a financial advisor who likely has access to the same products and services as Bangerter.  If not, I highly recommend Jeff.

I originally invested in 9 DST’s and over the years 3 were sold, and the funds re-invested in other DST’s.  I would say from my perspective today, my return as a whole has been “better than expected”, with my lowest return to date being 4.1% and the highest being 29%.

I am presently involved in 12 separate DST’s and I continue to enjoy great results.  They all produce a positive monthly cash flow (like collected rents), with zero involvement with the properties themselves.  This latter statement has proven to be the cherry on top.

When my sons inherit these DST’s, I have instructed them to stay invested with them.

If any of your other clients would like to chat with me, please forward me their contact information, and I will happily share my story and answer any questions they may have with regard to my own experience.

Kind Regards,

 

John D’Angelo

Carmichael, CA

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