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Deferred Property Tax

Commercial Real Estate Exit Strategy

Real estate owners can defer property tax on capital gains with the help of the Deferred Sales Trust. As financially rewarding as owning real estate can be, it does not come without its burdens. Tenants, complaints, property upkeep, and other issues have many owners ready to sell their property and transition to retirement. Other owners may be looking to increase cash flow by flipping their property and reinvesting in other real estate options. Having a commercial real estate exit strategy in place is critical. Freedom Bridge Capital offers the Deferred Sales Trust to help real estate owners sell their assets while deferring the capital gains tax on their property.

TAX PLANNING FOR THE SALE OF YOUR COMMERCIAL REAL ESTATE

One of the most important foundations of any successful real estate exit strategy is tax planning. Traditionally, you may be losing over 20-35% of your sales profits to capital gains taxes. With the Deferred Sales Trust, you can defer capital gains tax.

At Freedom Bridge Capital, your financial future is in good hands. Our Deferred Sales Trust professionals work with you to make the selling process as seamless as possible.

selling your real estate to the trust
selling your real estate to the trust

We’ll help you sell your property to the trust in exchange for a promissory note. This process sets the legal basis for deferring your capital gains taxes.

selling your property to the buyer
selling your property to the buyer

After your real estate is sold to the trust, we will sell your property to the buyer for you. Our legal professionals will take care of the selling process, from communication with the buyer to finalizing the deal.

finalizing the monthly payment structure
finalizing the monthly payment structure

The Freedom Bridge Capital team will work with you to create a monthly payment structure that best accomplishes your financial goals as a creditor. The Deferred Sales Trust can invest the entirety of your proceeds and can defer all of your capital gains tax. You also have the option of receiving a portion of your proceeds every month (you would be responsible for paying capital gains tax on that portion only).

building a diverse portfolio of investments
building a diverse portfolio of investments

You’ll be connected with top financial experts to help you craft an investment portfolio that best satisfies your financial goals as a creditor, and ensures a steady stream of passive income.

forming a wealth succession plan
forming a wealth succession plan

Our estate planning team will help you create a wealth succession plan for your heirs. We will look at all aspects of your financial life and help you formulate a living will, as well as a financial blueprint for your beneficiaries.

CAN THE DEFERRED SALES TRUST DEFER CAPITAL GAINS TAX ON MY PROPERTY SALE?

Yes, the Deferred Sales Trust legally defers property tax on the capital gains of your sale. When you use the Deferred Sales Trust, you sell your real estate asset to the trust. The trust then sells your property. This is classified as an “installment sale” as per IRC 453 of the Internal Revenue Code. Installment sales are legally exempted from paying the capital gains tax as long as you do not receive the principal of your sale. If you do not take any principalle, you can defer the capital gains tax.

THE DEFERRED SALES TRUST CAN FIT YOUR GOALS

DEFERRED SALES TRUST FOR RETIREMENT

The Deferred Sales Trust can be the ideal real estate exit strategy for property owners looking to retire. Selling your real estate to the Deferred Sales Trust lets you transform your asset into a passive income stream. If you’re ready to free yourself from the headaches of owning real estate, or you would like to sell your property and create a wealth succession plan for your family, then the Deferred Sales Trust may be right for you.

DEFERRED SALES TRUST VS. 1031 EXCHANGE

Both the Deferred Sales Trust and a 1031 exchange can defer capital gains tax on your property sale. The 1031 exchange is governed by IRC 1031 of the Internal Revenue Code. A property owners can swap their real estate asset for another “like-kind” asset – another property of the same value or greater. The owner sells their property, and the profits are held by a qualified intermediary. Once the new property is acquired, the qualified intermediary uses the profits to purchase the new real estate for you. This allows you to defer capital gains tax on your property exchange.

The Deferred Sales Trust offers a more flexible investment strategy than the 1031 exchange. Real estate owners who use the 1031 exchange must reinvest their profits into another like-kind property in order to defer property tax on capital gains. When you use the Deferred Sales Trust, your promissory note can be secured by stocks, bonds, annuities, and other assets of your choosing. You sell your property to the trust, who sells your asset to the buyer. By doing so, you can defer your capital gains tax. By using a diversified portfolio and investing strategy to secure your note, the Deferred Sales Trust can minimize much of the risk that comes with the 1031 exchange.

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DST VS. DELAWARE STATUTORY TRUST

The Deferred Sales Trust and Delaware statutory trust are sometimes confused because of their name and shared abbreviation (DST). These are two distinct property tax deferral strategies. The Delaware statutory trust allows property owners to sell their real estate to a trust. First, you complete a 1031 exchange. Then you transfer the proceeds of your sale into the trust. Up to 100 investors can participate in the trust, with each having a share of the property. The Delaware statutory trust is ideal for property owners who want a passive stake in the investment without the personal management involved.

Downsides of investing in a Delaware statutory trust include loan defaults and high vacancy rates. You do not have as much control over your investments because you share a stake with other investors. The property itself is owned by a master tenant sponsor, who dictates future decisions regarding the property. The Deferred Sales Trust is a more flexible way to defer property tax on capital gains. You can sell your property to the Deferred Sales Trust in exchange for a promissory note, and then the trust can secure your note by investing in stocks, real estate, mutual funds, and more.

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SCHEDULE YOUR FREE VIDEO CONSULTATION

A ONE-ON-ONE WITH OUR DST TRUSTEE

Schedule a free video consultation with our deferred sales trust specialists today! Our estate planning team offers complimentary DST analyses to determine your estimated tax savings using the deferred sale trust investment strategy. We’re here to answer any questions you may have about the deferred sales trust and help you get started on the sale of your company, practice, or property.

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HOW DO I LEARN MORE ABOUT DEFERRING PROPERTY TAX ON CAPITAL GAINS?

The Freedom Bridge Capital team would be happy to speak with you in more detail regarding deferring property tax on capital gains. Please give us a call at 800-897-0212 or request your free DST analysis today by filling out the form below.