A 1031 exchange is an excellent tool that allows you to defer the capital gains taxes when you sell real property. However, there are a lot of elements that can complicate any given 1031 exchange, and sometimes exchanges fail to meet the necessary requirements. This can be a devastating reality for taxpayers who were banking on tax deferral. Thankfully, there is an option that taxpayers can use in the event that their exchange fails – the deferred sales trust. In this article, we are going to focus on deferred sales trusts – what they are and how they can be a useful alternative to a 1031 exchange.
What is a Deferred Sales Trust?
A deferred sales trust is another way to defer your capital gains taxes on the sale of real estate (under section 453 of the Internal Revenue Code, rather than section 1031). In a 1031 exchange, you are required to roll your sales proceeds into replacement property, but in a deferred sales trust, you move those proceeds into other assets (bonds, REITs, mutual funds, etc.). This allows you to keep your money working for you over time, rather than having to pay capital gains taxes. It’s similar in to the 1031 exchange in that it allows for tax deferral, but the method is a bit different.
1031 Intermediary Services
CPEC1031, LLC works with clients across the country to facilitate 1031 exchanges of real estate. A 1031 exchange is a great way to defer your capital gains taxes when you sell real estate. As an added bonus, you get to keep your hard-earned money working for you in a continued real estate investment. 1031 exchanges can be utilized by any US taxpayer, which makes them extremely versatile! Contact us today at our downtown Minneapolis office to talk about your exchange with one of our qualified intermediaries!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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