Financial Freedom with Real Estate Investing

The 1031 Exchange is the best-known way to defer capital gains on the sale of a property. The problem for syndicators is getting ALL of your limited partners on board—which is next to impossible. So, what do you do if several LPs want to cash out but the rest are looking for an option to defer? The Deferred Sales Trust may just be the perfect solution.

Brett Swarts is the CEO of Capital Gains Tax Solutions, a firm dedicated to helping clients leverage the Deferred Sales Trust as a tool to overcome capital gains tax deferral limitations. He is also an experienced commercial real estate broker and investor, boasting $85M in closed transactions and a portfolio of multifamily, senior housing, retail, medical office and mixed-use properties. With more than 12 years of experience in the brokerage industry, Brett is committed to helping people create and preserve wealth and educating HNWI around capital gains tax deferral via the Deferred Sales Trust.

Today, Brett joins me to discuss the options we have for deferring taxes on the sale of a property, the 1031 Exchange and the Deferred Sales Trust. He shares the problems associated with the 1031, including the 180-day deadline, the pressure to buy a new property, and the challenge of getting all the investors in a syndication to agree. Brett goes on to explain the fundamentals of the Deferred Sales Trust as an alternative, describing how the process works and its benefits in terms of timelines and customizability. Listen in to understand the costs associated with the DST versus the 1031 Exchange and learn how to choose between the two—and avoid paying capital gains taxes!

Key Takeaways

Brett’s path to founding Capital Gains Tax Solutions

  • Commercial broker for Marcus & Millichap
  • Understanding of 1031 Exchange (tax efficient, preserve wealth)

The mechanics of the 1031 Exchange

  • Send money from sale to QI company
  • New property must close within 180 days

The penalty for not meeting 1031 deadlines

  • QI company sends funds on Day 181
  • Hit with tax on money received

The downside of the 1031 Exchange

  • Pressure to buy, tendency to overpay
  • Lower cap + higher interest rates
  • Rapid rental appreciation
  • Traveling depreciation schedule

The fundamentals of the Deferred Sales Trust

  • Trust itself buys property and immediately sells
  • Investors pay NO tax on funds in deferred state

How you use the funds in a Deferred Sales Trust

  • Work with third-party trustee + financial advisor
  • Put money into portfolio of liquid investments
  • Up to 80% can be directed to syndication deals

The advantages of utilizing a Deferred Sales Trust

  • Diversity across several deals, product types
  • 10-year DST can be renewed (no fixed time frame)
  • Starts new depreciation schedule
  • 23-year track record, survived 14 IRS audits

What to do if your investors are divided re: a 1031 Exchange

  • Defer part of entity with DST (cash out other LPs)
  • Money in trust can be directed to next syndication

When to choose a 1031 Exchange vs. the DST

  • 1031 maintains stepped-up basis (heirs sell tax free)
  • DST better for ultra-HNWI to avoid 40% death tax

The costs associated with the 1031 and the DST

  • 1031 = one-time fee of $750 to $1K
  • DST = recurring fees for trustee + financial advisor

Connect with Brett

Capital Gains Tax Solutions

CGTS on YouTube

CGTS on Facebook

Brett on LinkedIn

Brett on BiggerPockets

Resources

Start with Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek

IRS Tax Code on Installment Sales

Damion Lupo on ABI EP158

Michael’s Mentoring Program

Deal Maker Live

Hal Elrod

The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM) by Hal Elrod

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Michael on Instagram

Apartment Investor Network Facebook Group

Direct download: ABI_166.mp3
Category:Commercial Real Estate -- posted at: 2:18pm EDT

We all want to be the best version of ourselves for the people we love and lead. But most of us don’t think we can BE happy or fulfilled until we HAVE the things we want. What if we’ve got it backwards? What if we start with daily dedication to BEING a Level 10 person? What if self-development is the prerequisite for DOING what it takes to achieve our big dreams and HAVING the success we’ve always wanted?

Hal Elrod is the world-renowned author of The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM), one of the highest-rated bestsellers in the world. The book has been translated into 27 languages, and Hal’s method is practiced daily by 500,000-plus people in more than 70 countries. He is also one of the top keynote speakers in the US and the creator of one of the most engaged online communities on the web. In April, Hal released his new book, The Miracle Equation: The Two Decisions That Move Your Biggest Goals from Possible, to Probable, to Inevitable.

Today, Hal joins me to share his 2 near-death experiences and explain how he learned to accept the circumstances—and then commit to doing whatever it took to get the results he wanted. He walks us through the 6 elements of the Miracle Morning, discussing how the daily practice lays the foundation for becoming a Level 10 person. Hal also offers insight around the true purpose of setting goals and reveals how unwavering faith and extraordinary effort are key in reaching our big dreams. Listen in to understand Hal’s 4-step process for creating affirmations and learn how to apply the BE-DO-HAVE model to achieving financial freedom!

Key Takeaways

Hal’s first near-death experience

  • Hit head-on by drunk driver, broke 11 bones
  • Dead for 6 minutes and in coma for 6 days

Hal’s response to the prediction he would never walk again

  • Accept circumstances (emotional pain caused by resistance)
  • Chose to be happiest, most grateful person in wheelchair
  • Visualized walking every day + took first step 3 weeks later

The 5-Minute Rule

  • Set timer for 5 minutes to rant and rave
  • Say, ‘Can’t change it’
  • Focus all energy on what CAN change moving forward

Hal’s mission to elevate the consciousness of humanity

  • Dedicate time each day to becoming better version of selves
  • Must become Level 10 person to achieve Level 10 success

The 6 elements of the Miracle Morning

  1. Silence (meditation, prayer)
  2. Affirmations
  3. Visualization
  4. Exercise
  5. Reading
  6. Scribing

Why Hal wrote The Miracle Equation

  • Daily practice of Miracle Morning lays foundation
  • Miracle Equation = process for goal achievement

Hal’s insight around the real purpose of setting goals

  • Develop qualities + characteristics of goal-achiever
  • Value of growth on journey more important than hitting target

Hal’s mantra for developing unwavering faith

  • Commit to giving everything you’ve got to reach goal
  • Regardless of results along way, no matter what

How Hal defines extraordinary effort

  • Hard work AND consistency
  • Doesn’t matter how long it takes

The 4 steps to creating effective affirmations

  1. WHAT you’re committed to
  2. WHY it’s deeply meaningful
  3. WHAT actions necessary to reach goal
  4. WHEN committed to taking actions

Connect with Hal

Hal’s Website

The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM) by Hal Elrod

The Miracle Equation: The Two Decisions That Move Your Biggest Goals from Possible, to Probable, to Inevitable by Hal Elrod

Resources

Jim Rohn

Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki

The Miracle Morning Documentary

Hal on Rich Dad Radio

Think and Grow Rich by Napoleon Hill

Deal Maker Live

Michael’s Mentoring Program

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Michael on Instagram

Apartment Investor Network Facebook Group

Apartment Investor Network Facebook Group

Direct download: ABI_165.mp3
Category:Commercial Real Estate -- posted at: 2:11pm EDT

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