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The 1031 Alternative for Real Estate Tax Mitigation
Selling real estate comes with a few well-known options, but none of them are perfect.
Take the 1031 exchange: you have just 45 days to identify a property and 180 days to close. The financing has to line up, and you're stuck with contingencies that can cut your buyer pool in half. No wonder 60% of 1031 exchanges end up paying some or all the taxes anyway.
Your next option? Just pay the tax. Depending on your state, that could mean losing 30% or more of your sale proceeds—money that's gone forever.
Another option often promoted is the DST. Sounds good on the surface, but when you peel back the layers, you'll find heavy commissions—sometimes 12 to 16%—and steep fees. Add in strict rules on how you can exit, and in the end, the net return to you is often only about 5%. That just doesn't work for most investors.
And while there are plenty of other programs being pitched, most don't pass the IRS's three required tests for tax deferral. At Q companies, they've done the due diligence—almost all of them fail at least one, and many fail all three. In an audit, that means you lose.
But there is a simpler way.
And the IRS already recognizes and even provides a publication for—Publication 537. It's called an Installment Sale Trust (IST). The documents to set it up are straightforward, about 11 pages, and it's direct, easy, and more critical, it's compliant.
That's why we're hosting a Virtual Financial Summit. We'll walk you through all of these options—the 1031 exchange, paying the tax, DSTs, and others—so you can see the benefits and drawbacks for yourself. Most importantly, we'll show you how the IST can help you potentially reach a zero-tax bracket.
Comment ZERO TAX to learn how to better manage your real estate investments. I'm Heather Wagenhals showing you how to mitigate taxes, now go out and Unlock Your Wealth today.
Visit UnlockYourWealth.com for more great resources, tools, and strategies to overcome your personal and professional challenges to get out of debt, achieve financial freedom and live life on your terms today!
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By Heather Wagenhals
5
33 ratings
Selling real estate comes with a few well-known options, but none of them are perfect.
Take the 1031 exchange: you have just 45 days to identify a property and 180 days to close. The financing has to line up, and you're stuck with contingencies that can cut your buyer pool in half. No wonder 60% of 1031 exchanges end up paying some or all the taxes anyway.
Your next option? Just pay the tax. Depending on your state, that could mean losing 30% or more of your sale proceeds—money that's gone forever.
Another option often promoted is the DST. Sounds good on the surface, but when you peel back the layers, you'll find heavy commissions—sometimes 12 to 16%—and steep fees. Add in strict rules on how you can exit, and in the end, the net return to you is often only about 5%. That just doesn't work for most investors.
And while there are plenty of other programs being pitched, most don't pass the IRS's three required tests for tax deferral. At Q companies, they've done the due diligence—almost all of them fail at least one, and many fail all three. In an audit, that means you lose.
But there is a simpler way.
And the IRS already recognizes and even provides a publication for—Publication 537. It's called an Installment Sale Trust (IST). The documents to set it up are straightforward, about 11 pages, and it's direct, easy, and more critical, it's compliant.
That's why we're hosting a Virtual Financial Summit. We'll walk you through all of these options—the 1031 exchange, paying the tax, DSTs, and others—so you can see the benefits and drawbacks for yourself. Most importantly, we'll show you how the IST can help you potentially reach a zero-tax bracket.
Comment ZERO TAX to learn how to better manage your real estate investments. I'm Heather Wagenhals showing you how to mitigate taxes, now go out and Unlock Your Wealth today.
Visit UnlockYourWealth.com for more great resources, tools, and strategies to overcome your personal and professional challenges to get out of debt, achieve financial freedom and live life on your terms today!