This Crash Course is designed to compile all of our podcasts episodes about tax deferral in an order that will cover the subjects from start to finish.Working through these episodes in order will provide thorough education on these subjects. If you're interested in tax deferral strategies for real estate, you have come to the right place!
In this tax deferral series, we cover 1031 exchanges in depth from square one all the way through to the most advanced 1031 exchange strategies. We also cover Delaware Statutory Trusts, Deferred Sales Trusts, and installment sales.
All of the episode links below will direct you to the show notes where we look to move all of the important information spoken about on the episode to a written format.
This episode, Bill Exeter walks through everything related to forward 1031 exchanges, which are the traditional and most common form of this strategy. Successfully executing a 1031 exchange allows the investor to defer the capital gains tax and use the entire proceeds from the sale on a new investment property. Learn directly from Bill on how to successfully execute a 1031 exchange below.
In the first episode with Bill Exeter we learn that forward 1031 exchanges involve selling a property and subsequently identifying a new property and closing within a specified timeframe.
In this episode with Tom and Andy Gustafson of Atlas 1031 Exchange, we learn about how to add some flexibility to that timeline with a reverse 1031 exchange and about more creative uses of sales proceeds with improvement 1031 exchanges.
In this episode with Jay McPherson, we discuss Delaware Statutory Trusts used in combination with a 1031 exchange to defer capital gains tax and depreciation recapture tax. This strategy is most common where the investor would like to be done actively managing real estate or would like to move out of management and into a more diversified pool as a passive real estate investor.
This strategy is advanced and involves multiple very important and totally separate steps. In this episode, Warren Thomas walks us through the process of 1) 1031 exchange 2) Delaware Statutory Trust and 3) Section 721 exchange.
Executing this strategy allows the investor to exchange the entire sales proceeds for shares of a Real Estate Investment Trust (REIT).
In this episode with Matt Rappaport, we discuss Drop and Swaps. This strategy applies to real estate deals with multiple investors. Executing a drop and swap allows each individual to do what he or she sees fit with the proceeds, including a 1031 exchange with their portion.
Check out this blog post: Pros and Cons of a 1031 Exchange
Deferred Sales Trusts and Installment Sales
First off, we discuss two types of DST's. Delaware Statutory Trusts and Deferred Sales Trusts. These are not the same. In this article, Greg Reese explains the differences.
In this episode, Greg focuses specifically on Deferred Sales Trusts, an alternative strategy that allows the investor to defer capital gains. This is a specialized form of an installment sale. With a Deferred Sales Trust, the investor is not executing a 1031 exchange or interacting with a Delaware Statutory Trust - this strategy involves selling the property directly to the Deferred Sales Trust.
In this episode with Ruth Benjamin, we walk through the differences between traditional installment sales and monetized installment sale. An installment sale essentially allows the investor to defer capital gains by becoming the bank - capital gains are spread out over the life of the payments. When this loan is monetized, aka sold to a private lender through a capital asset dealer, the investor receives almost the entire sales price of the asset in the form of a loan, which is not a taxable event.
Clicking the episode links will take you to the post of the podcast episode where you can read much more in-depth show notes taken on the episodes.
For any real estate tax education you seek, check out our comprehensive guide: