Thinking of selling your business or a piece of real estate and worried about the capital gain associated with the sale? I may be able to help you mitigate the tax on the sale of a capital asset. Feel free to review the information in the PDFs below and schedule some time to talk about how this strategy works.
A Capital Gains Tax Deferral Solution
Owners of businesses, real estate, and other highly appreciated assets are often reluctant to sell due to the significant capital gains tax liability that can result. Fortunately, Estate Planning Team’s Deferred Sales Trust™ (“DST”) offers an attractive and flexible tax deferral alternative to a 1031 Exchange, which can dramatically decrease or eliminate the capital gains taxes that would otherwise be recognized in the year of the sale.
Rather than experiencing the debilitating drain of equity that results from a fully taxable sale, the DST permits the seller to generate a potentially higher rate of return by leveraging the pre-tax proceeds from the sale, which can be significantly greater. The DST is a type of IRC Section 453 installment sale, also known as a “seller carry-back” sale. Under this code section, the seller can achieve significant tax deferral benefits by not receiving actual or constructive receipt of the proceeds at the time of the sale, instead receiving payments made to them over time.
Moreover, the Deferred Sales Trust™ has greater flexibility than a conventional installment sale with respect to investment selection, risk management and the repayment timeframe.
The process starts with a detailed consultation with one of our specialized tax attorneys who will gather appropriate details of the transaction to determine if it is suitable for structuring as a DST, as well as what the potential benefits would be to the taxpayer. Th en, if the transaction meets the requirements for a DST, and sufficient benefits can be obtained for the taxpayer, a conditional engagement agreement is offered to the taxpayer by the tax law fi rm. Th is engagement requires no upfront retainer and does not obligate the taxpayer to pay for any services unless, and until, the closing of the sale of the appreciated asset and a decision by the taxpayer to proceed with the funding of the trust.
When the taxpayer decides to proceed, the ownership of their highly appreciated capital asset is transferred to a dedicated trust, set up solely for the taxpayer’s own transaction. The trust then sells the asset to the buyer at the higher cost basis that was just established in the prior transfer from the seller to the trust.
A Way Out
How many times have you heard,or made these comments?
“If I sell my property, will I be burdened with taxes?“
Those of us who own highly appreciated assets such as homes, commercial real estate and businesses, are often reluctant to sell that asset because of the capital gain tax and depreciation recapture costs associated with the sale. There is a perfectly legal way to defer capital gains tax and reduce your overall tax burden.TheDeferredSalesTrust? can provide a way out.
“I do not want to continue to hold or manage the asset or investment, in order for my kids to inherit my assets at a stepped up value when I pass away?“
Sound too familiar? Many people do not realize the high costs of estate tax and “step-up”values. There is a smart, functional, and legal way to address these issues with a powerful tax deferral strategy called the Deferred Sales TrustTM.
If you own a business or real estate with a large amount of gain and are not selling your property because of capital gain taxes, or can?t find suitable, qualified property exchanges, then you may want to consider a Deferred Sales TrustTM (DST). The DST utilizes a legal and established method that allows the seller of the property to defer capital gain taxes due at the time of sale over a period of time that is selected by the Seller/Taxpayer in advance.
(732) 231-2971
51 James Way, Suite 102