DEFERRED SALES TRUST EXPLAINED
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There are strategies out there that could save you thousands of dollars in taxes, but you probably won’t ever hear about them unless you work with an experienced professional.
The Deferred Sales Trust is one of those. It isn’t well known, but it should be. Here’s how it works.
We sometimes have clients who own property for a long time, or a business or some other highly appreciated asset, and they’re reluctant to sell because of the thousands, or hundreds of thousands, of dollars they will have to pay in capital gains taxes.
They may know about the 1031 Exchange, an excellent tool that allows you to defer paying capital gains taxes on a sale by reinvesting the proceeds into a replacement property. The problem is, some people just don’t want to go back into real estate. That’s where the Deferred Sales Trust comes in. By using Section 453 of the Internal Revenue Code, which pertains to installment sales and related tax provisions, it lets people sell a property or business, defer the capital gains tax and roll the money into investments other than just real estate.
HOW 1031 EXCHANGE WORKS
Decide to sell an asset like real estate or a business.
Instead of selling to a buyer directly, you sell to a third party trust which sells to the buyer.
You set the terms and only pay Capital Gains when you receive income payments utilizing a Section 453 installment sale.
WHY CHOOSE A DEFERRED SALES TRUST
ELIMINATE ASSET MANAGEMENT HASSLES
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