Have you ever wondered how you can avoid paying taxes when you sell your business? Today we are going to be talking to Brian Forcier, whose years of experience at Titanium Partners and also as a real estate investor have taught him how to defer taxes and make selling your business possible. He does a great job explaining the 1031 exchange. Will it fit into your exit plan? Find out by listening!

You know you’re going to pay some taxes when you leave your business. But do you realize how much you might be on the line for? Brian Forcier discusses tax strategy on how to avoid paying taxes that could keep you from achieving your post-sale financial goals.

You buy a thing, it depreciates over time. We know. But now that you’ve depreciated out, you’re going to pay tax on the full amount—unless you know how to defer your taxes. Financial advisors will likely suggest you massage your EBITDA or perform another fantastically clever workaround. But sometimes the philosophy of KISS (keep it simple, stupid) is best.

Let’s avoid those capital gains and consider another form of deferment: purchasing a like-kind property which you can operate as a business, if you wish, or which runs itself.

What is a 1031 exchange? As defined under Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), a taxpayer may defer recognition of capital gains and related Federal income tax liability on the exchange of certain types of property.

While your financial advisor might not like the idea of you settling into another piece of property when you sell your business, it might be the perfect revenue and tax deferment solution for you. Doing a 1031 exchange is an underrated tax solution for your exit—whether you’re heading into retirement, or you want something ‘for now’ to offset the taxes you would otherwise pay.

As Brian says, a 1031 exchange is kind of like playing Monopoly where you trade four houses for the hotel, but the beauty is you don’t have to give two of your houses back to the IRS when you buy the hotel.