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Brett Swarts

52 Podcast Episodes

Latest 25 Mar 2023 | Updated Daily

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Episode 393: Escaping the 1031 Trap, with Brett Swarts

The Smart Real Estate Coach Podcast|Real Estate Investing

Brett Swarts is a Deferred Sales Trust™ Trustee, DST expert, capital gains tax deferral expert, investment real estate expert, multifamily broker, and the founder of Capital Gains Tax Solutions – a company helping individuals to defer capital gains tax on the sale of their highly appreciated assets, eliminate the need for a 1031 exchange, and unlock transformational wealth building options so they can create & preserve more wealth. He created ‘Capital Gains Tax Solutions‘ to equip high net worth individuals and their trusted advisors with the Deferred Sales Trust™ tool to help them solve capital gains tax deferral limitations. What you will learn in this episode: What it means to be trapped by a 1031, and how to avoid it Who qualifies for a capital gains tax deferred sales trust What a Delayed Sales Trust is and how it works with taxes When you can take money out of your DST Why you should have a backup plan if you choose to do a 1031 Resources: Website: https://capitalgainstaxsolutions.com/ LinkedIn Personal: https://www.linkedin.com/in/brett-swarts/ LinkedIn Business: https://www.linkedin.com/company/capitalgainstaxsolutions/ Additional Resources: Everyone is always asking us, “How is it possible to buy real estate without using my own cash or credit?” With decades of combined experience in real estate, we’ve perfected the process of investing creatively. We want to share as much as we can with you, which is exactly why we're running this FREE workshop! If you're thinking about leaving your job, escaping the W-2 lifestyle, and starting on the path towards creating generational wealth — this is for you! To register, just visit: smartrealestatecoach.com/pcws. Schedule a free strategy session with us. This is an opportunity for you to have an honest conversation with our team about your background, investment goals, and create some action steps toward creating the life of your dreams. Together we'll discover where you are, where you want to be, and what's in the way. Just visit: smartrealestatecoach.com/action. Our free Master’s Class is the ONLY webinar where you're given the exact techniques we use in our family company to buy and sell homes every month — all across North America and ALL on TERMS! Register by visiting: smartrealestatecoach.com/mastersclass The Wicked Smart Investor's Toolkit is a great way to dip your toe in the water of buying properties on terms. Here you'll receive seller scripts, our investor blueprint, be able to listen to live calls, and much more! Enroll for free at smartrealestatecoach.com/tools The Quantum Leap System has everything you’ll need to start buying and selling on terms (without banks and without your own money or credit), launch & scale a business that fits your goals, and strengthen your mindset so you can follow the proven path to becoming a successful real estate investor. You can learn more by visiting: smartrealestatecoach.com/qls. For additional information on lead generation, funding, mindset coaching, legal assistance, virtual staffing, and business growth, visit the Investor Resources section of our website at: smartrealestatecoach.com/resources. Lastly, don’t forget to grab a discounted ticket to our next event! Visit: smartrealestatecoach.com/summit50


1 Mar 2023

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Episode 25: Deferred Sales Trusts with Brett Swarts

Practical Tax with Steve Moskowitz

On today’s episode; Steve sits down with Brett Swarts, Founder/President of Capital Gains Tax Solutions to discuss Deferred Sales Trusts, 1031 exchanges, and Delaware Statutory Trusts! Episode Transcript Intro: You’re listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm. Steve Moskowitz: Welcome, and thank you for joining us, and it’s my honor to have Brett Swarts joining us. He’s considered one of the most well-rounded capital gains deferral experts and informative speakers in the country. He’s founder of Capital Gains Tax Solutions, and I’ll ask you to give us your phone number a little bit later. And he is an exclusive Deferred Sales Trustee. He’s host of “Capital Gains Tax Solutions Podcast”, and a lot of other things. He has great strategic alliances and clients, and he’s created and developed tremendous tax areas where we can go ahead and do all kinds of wealth planning. One of my favorites is DST, Delaware Statutory Trust. Recently, I was quoted in the Wall Street Journal about Delaware Statutory Trust, so you know how I feel about them. And he goes ahead and he’s gonna create and preserve all kinds of wealth for you. He’s passionate about what he’s doing. His experience is tremendous with the DSTs and the 1031 exchanges, and commercial and all the real estate brokerage. And formally, he was with one of the largest brokerage firms, and now he’s in Sacramento and he lives in Roseville, California with his wife and their five kids. So we know that he has to be making lots of money to make this work. And without further ado, I’d like to open the floor. And let’s begin, tell us about transformational exit planning, versus transactional exit planning. Brett Swarts: Thanks Steve, a pleasure to be here. And yes, so Brett Swarts, founder of Capital Gains Tax Solutions. So transformational exit planning I like to kinda define in a couple different ways, and it can be transformational for different people in different ways, but we’ve all heard about financial freedom, right? You have enough income to pay for our expenses, and maybe perhaps we don’t have to work anymore. We have enough passive income doing those things where we can free up some of our time freedom, which is kind of the second part of a transformational wealth plan or financial plan. The third one has to do with what’s called entrepreneurial freedom, right? The ability to start a business or start a new venture or buy some real estate and doing that at what I like to call kind of the fourth freedom, which is optimal timing. And collectively, you have to look at multiple things and I actually have this, a Rubik’s cube here, Steve, and I actually bought this on Amazon. And sometimes people show up to us and they have these different colors on different ends, and it’s kind of outta whack and different ways of adjusting what’s called tax flow versus cash flow planning. We try to create something where it’s as congruent for life, for freedom of time, energy, entrepreneurial freedom. The last one has to do with location freedom, right? As at the end of the day, a lot of people are moving out of California. A lot of people are moving out of their business transactions, moving out of these high end primary homes. And our overall goal is what? It’s freedom, freedom with their capital, freedom with their time, freedom with their finances, freedom with entrepreneurial ventures and then freedom with location. And then collectively, if you can bring these together with the right set of professionals, you can achieve what’s called a transformational exit plan or wealth plan. Steve Moskowitz: And I can say that in practice, we see the client, so just leaving California in droves, and it’s so important because California is an extremely aggressive state and people think, “Well, I’ll just move and that’s that, “and I don’t have to pay those taxes anymore.” But what they find out much to their chagrin is, well, wait a minute, sometimes California says, “You know what, you’re not a prisoner. “You can go ahead and leave California, “but you still owe the taxes here.” But that’s the topic for something separate. Tell us, this comes up all very recently too, how do you sell cryptocurrency all tax deferred invest into commercial real estate? Brett Swarts: Great, great question. And it’s using something called a Deferred Sales Trust. And not to be confused by the way, with the Delaware Statutory Trust, which are both DSTs, same acronym, just a coincidence. And for those who are familiar with Delaware Statutory Trust those are just a form of a 1031 exchange. I like to call those the Hollywood Video to the Blockbuster 1031, and they have their place and they have some usefulness certainly. We just closed a partial Delaware Statutory Trust last week for a client who had what’s called a mortgage over basis challenge for an apartment complex he was selling in Colorado. Then he is able to put the rest of the funds into the Deferred Sales Trust and just realizing that certain things work for certain asset types. So for example, the 1031 exchange only works for investment real estate. It doesn’t work for high end primary homes. So we did an $8.3 million sale in Palo Alto for a client who wanted to sell and felt trapped, wanted to move to Nevada and had a big tax above and beyond his 121 exclusion, so we used that. But it also works, Deferred Sales Trust also works for cryptocurrency. And so we had a client, she works for Google and she bought Bitcoin for about $50,000 and she got a big gain, Steven. In fact, it was up to 50 million at one point, and it’s really high and she’s riding a lot of the waves and she’s looking at a big tax. And so instead of selling and paying about 30% or so, or 37% or so in tax, she’s looking at exiting using what’s called the Deferred Sales Trust. And so we set up a trust and it’s kinda like an IRA, it’s kinda like a 401 , it’s kinda like a 1031 exchange. And instead of taking all of the capital at closing, she was able to exchange it for a promissory note and sell the asset, the Bitcoin to or transfer the Bitcoin to the trust and the trust ultimately sells it to the market. Smoke clears, and she’s in what’s called an installment state or she’s a lender. And by doing in these certain orders with a third party unrelated trustee, that’s our rule, she’s able to achieve tax deferral. So I’ll pause there, Steve, and then we can talk about how do we go back into real estate. Steve Moskowitz: But is there some way to eliminate a need for a 1031 exchange? Brett Swarts: So, yes, it’s also the Deferred Sales Trust, right? So what is a 1031 exchange, and what’s the purpose of it? Well, it’s to sell and defer tax and buy something else within a short period of time. So the need is to defer that tax, and also the need perhaps is to invest into some real estate. Or what if you could sell, defer the tax, but you didn’t have to do it at any certain time? In fact, our parents taught us to sell high and buy low, Steve. Steve Moskowitz: Bernie Baruch, I remember that. Brett Swarts: Yeah, they didn’t teach us to sell high and buy higher, buy low or sell high and buy higher 180 days later, right? With properties that cap rates are very low and inventory is very low and prices are through the roof. They taught us to be smart with our timing of our sales. And so this is what the Deferred Sales Trust allows you to do. In fact, the best story for this is for a gentleman, I call it the Monday morning quarterback, Steve, and he’s in Minnesota, and this guy’s worth a lot, a couple hundred million dollars at the time. It is 2006 and he’s got his 1031 goggles on, but everything is just really, really fuzzy. He’s like, “This doesn’t make any sense. “This looks scary out there.” He didn’t know 08 was happening or could happen at the extent that it would, but he thought something might be on the horizon. And so instead of selling in 1031 exchange like he always did, he decided to use the Deferred Sales Trust. And so he moves all of the equity into the Deferred Sales Trust, defers millions of tax, and puts it into a conservative portfolio of liquid investment grade securities. And this is where the fun starts. Five years go by, and the market takes a hit on both sides, but he stays pretty conservative on his holdings, okay. And this is why it’s the Monday morning quarterback. The bank calls him back and says, “Hey, you know that property you sold?” He goes, “Yeah.” “To that crazy 1031 buyer in California?” He said, “Yeah.” “Well, we just foreclosed on them and we’re wondering, “do you wanna buy it back from us?” He goes, “Well, maybe, what’s the price?” And they say, “60 cents on the dollar.” So it sounds like a pretty good deal. So the trust eliminates the 1031 exchange in that he was able to partner with the trust, purchase this property, all tax deferred, not using the 1031. So he sold high and he bought low, and that’s what our parents taught us to do, Steve. Steve Moskowitz: Absolutely, so how do you attract high net worth partners? Brett Swarts: So by unlocking something that provides more value than what they’re providing now. As an example of this, Steve, I was at Marcus & Millichap early in my career, I was asking the question, how do I attract high net worth individuals to hire me to sell their multi-family property? In other words, how do I compete for these listings when everyone else has more experience has more of a track record? And he gave me some words of wisdom, Steve, and the wisdom was this, he says, “Brett, “the more you know more about their property, “the moment you know more about their property, “properties in the area, ways to add value.” And here’s the key, “Ways to solve their problems “than they know about their own situation “is the moment you start adding value. “Everything else is just wasting their time.” He said, “When you call them on the phone, “you are wasting their time if you’re not “knowing more about their property, “properties in the areas, the rents, ways to cut expenses, “ways to sell at a higher price, some kind of inside “detail to help them manage their business better, “some kinda solution to their problem.” What was the problem in the 2008 crash? Well, part of it was people had overpaid via the 1031 exchange. They had too much debt, non left liquidity, not enough diversification. And they knew they were overpaying in 05, 06, 07, but they felt like they had no other route except for the 1031 exchange. And then some lost half, some lost everything over the next three year period. I’m in Sacramento seeing the kind of the blood in the streets, and we’re assessing this saying, “How do we add value and solve this problem “so it never happens again?” And that’s when the Deferred Sales Trust was introduced to me. And that’s when it helped me to win business, and fast forward was able to grow my business and my practice on this. And so it’s really providing solutions to people who have problems and you have a solution to that problem. Back to the Rubik’s cube, they show up in the broker or the CPA or the financial advisor. It might be all these different colors and they don’t know how to solve the problem, but they bring in someone like yourself, Steve, or maybe someone like myself, and we have our expertise and we help to make the Rubik’s cube or the problem they’re trying to solve congruent on every side. And that’s the moment that they can grow their business because they’re solving more problems. Steve Moskowitz: That’s fantastic. Now, you know I’m always thinking about taxes and people are always concerned about their estate taxes, and I’m also concerned that although there’s a nice exemption now, the government’s always looking at that to say how are they gonna cut into that? How are they gonna take it away? How are they gonna reduce it and get more and more people involved here? And with estate tax savings, at the close of a DST, tell me about moving funds outside the taxable estate to save the estate taxes. Tell me about that. Brett Swarts: Yeah, so the Deferred Sales Trust Plus, which is a little bit different than the traditional Deferred Sales Trust, which is based upon IRC 453. The plus is something that is separate than IRC 453. It’s a proprietary structure what we do here, but I wanna tell you about the outcome. The outcome is that the funds are outside of your taxable estate. So what does that mean? Well, that means that upon your passing, it’s not gonna be a part of your taxable estate. So if anything above the 22 million married, it’s about 24 million with some inflation right now, and 12 million single, anything above and beyond that was inside the taxable estate that had you previously sold while you were still here before your estate passed into a DST Plus, removes it outside the taxable estate, which essentially eliminates that 40% death tax, okay? And by the way, this is something that the 1031 Blockbuster cannot do. 1031 Blockbuster has to do with stepped up basis on capital gains tax, but doesn’t solve for the elephant in the room, which is the estate tax or the death tax. So the stepped up basis has nothing to do with this. It’s the total amount of your estate. So what do people typically do, Steve? Well, they maybe buy a bunch of life insurance. They maybe try to do some gifting. Maybe they give it all away or a big chunk away to charity. And so we like to say that the Deferred Sales Trust Plus solves that challenge without giving it away to charity, buying life insurance, or having to do a bunch of gifting. And so that’s about as much as I can say on the outcome, as far as the how, we’d have to get under the NDAs and to sit down with our tax team, all at no cost, no obligation to walk through those details. Steve Moskowitz: Absolutely. And tell us about why it’s so crucial to have liquidity, diversification, debt freedom, and tax deferral when you’re selling your highly appreciated assets. Brett Swarts: I think right now more than ever, diversification, liquidity and being out of debt is important, partly because we’re seeing some all time highs in the stock market, in the cryptocurrency market until recently, as well as the real estate market. And so if you’re overconcentrated in a single asset class, you could be at, put yourself at a position of weakness because if those values drop in that single asset class, so does maybe a high part of your net worth. And an example of this, we helped a client who sold us a $7.9 million property in Santa Cruz, not too far from where you’re at Steve, outta San Francisco. And she’s in her 70s and they lived in the house and they have a couple million of debt on the property, and they’re looking at a huge capital gains tax of around $3 million. And all of their equity is tied to this property and they’re doing some Airbnb, but then you have something like COVID-19 where they shut down some of the rental business. You also have cities that are ever changing their laws about what can be rented, what cannot be rented. And so she’s just going, “Well, you know what, “I don’t want to have to deal with the stress “of a lot of my net worth inside of one property “in one location that can be shut down by rent control “or eviction control “or whatever else controlled by the government. “How about we sell, pay off the debt, defer the tax, “and move it into the Deferred Sales Trust “so that we don’t have to be all of our eggs in one basket “as well the funds are liquid?” So should an opportunity come up, they have an opportunity to invest all tax deferred into back into real estate, which is powerful as well. So it just gives you freedom. And I have another client, we just closed a deal in Colorado. And he said, “Brett, we were just tired. “We’re doing all this work. “We’re making a lot of money on these rentals.” He goes, “but we don’t know how much time we have left. “We don’t know, we can’t take this for granted now “with what’s happened with COVID-19 “and everything else in our health.” And they’re in really good health and they’re still pretty young, but they’re just saying, “Brett, we wanna play more, right? “We wanna have more fun. “If we can increase our cash flow, defer our tax, “not have to work as much, “that’s what we want to enjoy.” And so it’s about that overall transformational wealth planning, and then how do these little pillars fit into that? And that’s diversification, that’s liquidity, that’s optimal timing, that’s location freedom, that’s entrepreneurial freedom. They wanna start another business, they can. They wanna do ground up development, they can with the funds, it’s all tax deferred. And so that’s the overall concept, Steve. Hopefully, that answers the question. Steve Moskowitz: That’s great, well, I have seven more questions for ya. Brett Swarts: Okay. Steve Moskowitz: What’s the top seven questions to ask every tax deferral strategist? Brett Swarts: Okay, let’s see if I can remember ’em all. Okay, so no matter who’s bringing it to you, whether it be Steve or myself or anyone else that’s pushing anything that you should be maybe particularly taking a look at for, especially for tax, okay, you wanna ask some key questions. Number one, so what is the actual IRC tax code like? What is that based on? You wanna know that. The Deferred Sales Trust, the foundational is the IRC 453. Number two. Okay, that’s great, but how many of those have your attorneys or how many people have actually done this thing? Has it been five or 10 or 200 or thousands, right? And the answer with the Deferred Sales Trust is thousands and thousands and thousands. Okay, the next question would be, well, how long have they been doing it for, right? This is important. The answer for the Deferred Sales Trust is 26 years, but you don’t want something where it’s, that’s shorter than that, right? Or it can be shorter than that, but you don’t want something that’s too short or it hasn’t been tested, which is the next question. Well, of all these thousands of closes over all these 26 years, how many have been actually tested or audited by the IRS? Now, the Deferred Sales Trust there’s been over a dozen no change IRS audits, including $125 million deal in San Diego, as well as additional three formal audits, and these were, one was a couple of promoter audits. Now, these were all, no change, no findings, which is the next question. Well, of the audits, what was the outcome? And also who defended the clients or who provided the information on to the tax authorities, right? So you don’t wanna go into a surgery. And I’ll give an example, I played basketball in college, Steve, and I blew out both my ACLS. And I remember my first ACL, I signed my scholarship. I’m all excited I’m achieving one of my dreams. Two weeks later, I blow out my ACL. And the emotion and the frustration were all time high for me. And I remember walking into Sacramento, downhill Sacramento to the doctor’s office. And I sit down with him and we start talking and he sounds pretty smart, but I ask him some key questions. I said, “Doctor, how many of these have you done?” And he said, “Thousands.” I said, “Who are some people you’ve done ’em on?” He said, “Well, people like Chris Weber.” I’m like, “Chris Weber, he’s like my hero, right? “He’s a Hall of Famer.” I’m like, “Wow. “What are the outcomes?” “These are very successful outcomes “in the way that we do it, okay?” And so these are some of the things you should be asking. And if the answer is, “We haven’t been tested by the IRS,” that’s not a good sign, or, “We’re not actually, “have never defended our clients against the IRS,” that’s not a good sign. Or they’ve only been doing it for a short period of time. Also, do you provide lifetime audit defense? Who’s gonna pay for this if the audit comes, right? State or federal. With the Deferred Sales Trust, there’s lifetime audit defense. So I don’t know if that’s seven exactly, Steve, but those are some of the general questions you wanna be asking. Steve Moskowitz: That’s great, and this is a question clients ask us all the time. How do I know it’s legal? What are the fees? What are the track records? Tell us about that. Brett Swarts: Yeah, let’s talk about the legality of it. And I’m gonna start with, first of all, the track record, but then I’m gonna tell you a story to help you get some confidence and credibility in the Deferred Sales Trust. And this is what we hear all the time. “Brad, this sounds amazing. “Oh my gosh, what you’re saying sounds incredible, “but I just don’t understand how I haven’t heard about “the Deferred Sales Trust yet. “I don’t get how my CPA or my tax professional “hasn’t told me about it. “It seems like it’s too good to be true. “It seems like somebody would’ve already told me about it “if this is all happening all the time.” And so first of all, the track record is again, thousands of closes, billions under management, over 26 year track record, over a dozen no change IRS audits, lifetime audit defense. It’s literally batting 1,000. It’s perfect, it’s never had a private letter ruling. Okay, there’s been national law firms that have reviewed it and given it the thumbs up, but it’s proprietary, it’s protected, it’s the first thing. But let me tell you a story about a gentleman who gives… Because that’s one thing for me to say it, Steve. I grew up in the real estate business in the Bay Area. I’m a multi-family broker. I didn’t study to be a CPA, I’m not a tax attorney. I’m not a CPA, right? I’ve studied underneath them for about 10 years now. But I came into it brand new to this whole thing too. In fact, I was just doing 1031 exchanges not knowing about this. And then I learned about it and now I fell in love with it, and now we provide it. But back to this part of this story, and it’s not just me, it’s other people that have looked at it, and I’ll give you a couple examples. First one, a gentleman named David Young. And for those who don’t know David Young, he ran with a guy named Bill Gross. For those who don’t know Bill Gross, Bill Gross is one of the most respected kind of financial money managers in the last 20 years. He worked with a group called PIMCO. PIMCO is one of the biggest wealth management companies in the world. They manage pension funds, endowments, very sophisticated people, and they’re financial advisors. And everybody wants them to sell their tax thing or to at least put their name on it. And so David and Bill, they build this PIMCO for about 20 years, from 80 billion to 1.2 trillion. And David and Bill and about five others are kind of part of their core team. They all retire, they get a big payday, they’re all happy. Well, they form a group or David does and four of the guys, form a group called Anfield Capital outta Irvine, California. And about four years ago, they get approached with the Deferred Sales Trust. And like any of us, they’re skeptical, but they’re open minded to see what might be there. And so they start looking at it. And they don’t look at it for just two days or two weeks or two months, they do a two year due diligence, Steve, including their legal team, including talking with the clients, talking with the banks, talking with the financial advisors. Flying back and meeting with the tax attorneys or my business partners to go through it on a whiteboard for two days, asking all the questions you can imagine. I mean, these guys are professional due diligence people when it comes to businesses, and they’re economists. Very smart and very sophisticated. And they sit down after two days with the tax attorney, after two years of due diligence, and they come to two conclusions, number one, “That might be the smartest person we’ve ever met.” And that’s saying a lot. That’s saying a lot, right? For them. Number two, “We are all in. “We’ll become a part of the Deferred Sales Trust “inner circle advisory team, “and we will support the financial advisors “that are providing this for their clients and the trustees “to help manage the money.” Because what you’ll learn is it’s not just one person that’s behind this, it’s multiple professionals that are helping to execute this, okay? And so what I always ask people that are skeptical and cautious as you should be, this is serious stuff, is number one, if it’s good enough for David Young and his legal team after two years of due diligence, he has a 30 year track record. Not that he’s a tax attorney or a CPA, you still wanna bring in those professionals to vet us and get you feeling really great about this. But if it’s good enough for him and his legal team after two years of due diligence, is it good enough for me, Steve and whoever’s listening to this podcast or watching this YouTube video? And that’s story number one, Steve, if that makes sense. Steve Moskowitz: That makes a lot of sense. How about dissolving the partnership advantage with DSTs? Brett Swarts: Dissolving partnership advantage. So, yes, so part of the 1031 exchange, one of the challenge is the whole entity must move. And what does that mean? That means that me, Steve, and like four others owned a property into an LLC, and we’re selling a multi-family property in San Francisco for $10 million. We bought it for two million 20 years ago. And we were wanting to not trade or not exchange, that typically means that the entire entity must dissolve. We all pay our taxes. There are those who have done something called a drop and swap and move into smaller LLCs. And there’s some definitely some questions there, and I’m not an expert on that, but generally speaking, that means that the whole entity, the whole LLC must move, and then they must all go buy another property, which is like Blockbuster, because we all have to stay together. But what if five of the partners wanna go separate ways? What if other five wanna do a 1031? What if we have different needs for the capital? So what’s unique about the Deferred Sales Trust is it has seamless partnership separation, whether it’s an S Corp, C Corp, LLC, LP, public stock, private stock, business, real estate, primary home, cryptocurrency. And if there’s any partners in any of this, we can exit. Each partner can go their separate way. Meaning one can go and just pay their tax, or one can go and just do a Deferred Sales Trust, or they each can have their own Deferred Sales Trust. That’s separate entities, not co-mingled. And based upon their risk tolerance is invested. It can be separate financial advisors. And so it’s a seamless partnership separation to keep that tax deferral without having to have the whole entity move. Steve Moskowitz: That’s great. Now, how do I sell and wait on the sidelines or buy or develop real estate on my own timing, all tax deferred? Brett Swarts: Yeah, I’ll tell you another deal, a close story for a client. His name is Adam. Oh, I’m sorry, his name is Shay. His other business partner is, his business partner is Adam is doing a Deferred Sales Trust right now, too. But Shay sold a business in Alabama for 2.6 million, and he deferred about 600,000 of tax at no basis. By the way, he was in a partnership there, and his two partners bought him out, which is cool. He was able to defer the tax. Then he partnered with the trust to build 70 multi-family units in Tennessee, all tax deferred. And so the answer is the funds have no timing restriction, meaning there’s no 45 day 180. You can invest into the stock market with the funds, hard money lending into real estate, into new business ventures. In other words, there’s no like kind requirement that the 1031 exchange requires. There’s no 45 day identification or 180 day close, or any replacement of debt required unless you have debt over basis, and that’s part of why we use the Delaware’s Statutory Trust. Back to the Rubik’s cube, every situation’s a little bit different and it’s not a one size fits all. We’re gonna assess that and then just figure out what’s the best path forward? But that’s really the answer. The funds can sit in the bank and then you can just be patient, right? I had clients during COVID-19, Steve, sit in the bank for months because they were cautious with the real estate market- Steve Moskowitz: Sure. Brett Swarts: and the securities market. Steve Moskowitz: And tell us about how a DST can save a failed 1031. Brett Swarts: Very important to understand this. First of all, realize that most exchange accommodators don’t want you to know about this, okay? And neither do the traditional commercial real estate brokers, because well, they’re in the business of 1031 exchange and transactions, okay? So that is number one. However, if you’re working with an exchange accommodator who will accommodate with the Deferred Sales Trust, which by the way, we have one in San Francisco and San Jose, and they’re phenomenal and been in it for years, you can have the funds there, and on day 46 or day 181, essentially, the funds, instead of going to your personal account where it’s taxable, can go to the trust account and therefore remain tax deferred. That’s kind of the easy way to say it, but we wanna be, make sure that you’re working with an accommodator that will accommodate. And if they will not accommodate, run the other way, because what’s unique about the Deferred Sales Trust is if you don’t use it, you don’t pay anybody. But if you’re with an exchange accommodator who won’t give you the backup plan that could cost you a lot of money. And in the fact, the past four weeks alone there has been multiple people who call me about one or two exchange accommodators. And they’re like, “Brett, they won’t accommodate. “They won’t even talk to us. “They won’t even talk to you guys. “They’re just gonna say no, no, no, no, no.” And so I would just say, be very cautious with who you choose ’cause it makes a big difference. Steve Moskowitz: It does, I know from being a practicing tax attorney that comes up all the time and that really is a lifesaver for an awful lot of people. So how do I defer capital gains tax on the sale of a business or primary home and invest in commercial real estate, all tax deferred? Brett Swarts: Right, so kind of what we said before, right? You A, form a trust. B, the funds go to the trust at closing. C, you partner with the trust to buy investment real estate, no timing restrictions. That’s kind of the short answer there. Steve Moskowitz: Right. How about, how do I help my clients escape feeling hostage to a 1031 exchange? Brett Swarts: You escape feeling hostage to a 1031 exchange by knowing that there’s another option called the Deferred Sales Trust, right? And so you don’t have to overpay for that property. I can’t tell you how many properties that owners that we’ve saved even in the past few months, and they’re just thrilled, they’re like, “Oh my gosh, I didn’t know there was another way.” And so it’s that educational process, and then it’s seeing the live deals, it’s talking with the clients, it’s joining our mastermind. Basically just seeing the evidence of what’s actually happening versus where most people are living in Blockbuster. They think that’s the only thing that’s there, but there’s a thing called Netflix and that’s the Deferred Sales Trust. So it’s just awareness, having these conversations, listening to podcasts like Steve’s to know that there’s more possibilities than the old ways of doing things. Steve Moskowitz: The awareness is so incredibly important because other times when I counsel clients, very common question I’ll get, “Is that new?” And most of the stuff isn’t. They say, “Well, why didn’t my last guy, “why didn’t my CPA tell me?” And I say, “Well, that’s why you’re here.” And I mean no disrespect to CPAs. As you know before, I was a tax attorney, I was a CPA, but it’s different and you wanna be with somebody like you who is telling you, “Hey, do this and this and this,” ’cause he can save you all kinds of money as opposed to shuffling numbers from one place to another. How about, how do I grow my business using a Deferred Sales Trust? Brett Swarts: So again, this would be for those who are serving high net worth individuals. So the business would be, if you’re in the business of being a luxury realtor, a financial advisor, a CPA, you could be a mergers and acquisition attorney and/or a broker. And I’ll give you one example right now where I work with Michelle Seiler Tucker. She’s one of the top 10 M&A advisors of the country. And she actually came on my podcast about a year and a half ago. And we were talking about her deals and what she does. Come to find out, she goes, “Oh my gosh, Brett, “I have a $55 million deal that we had listed last year, “we had a buyer. “But when the buyer showed up to pay the money “and the sellers did their assessment on their tax, “the seller said, ‘I’m not gonna do the deal. “‘I don’t wanna pay the tax.’ “And so the deal froze, it completely froze.” And she goes, “Brett, do you have a way “to help defer the tax on a business sale of that size?” And we said, “We do. We do. “It’s a DST plus, and it’s really amazing. “It’ll move the funds outside the taxable estate. “It’ll give you a chance to defer the capital gains tax “and some income tax along the way, and really cool stuff.” She goes, “Brett, if you can solve that problem, “I have five or 10 of these a year.” And she goes, “But I can’t sell it “unless we solve that problem.” And so we came in and we’re solving the problem. The deal hasn’t quite closed yet. They have the buyer ready to go. They’re in the due diligence period, but that’s an exact live deal where she has no business. The business stalls, the seller doesn’t sell. She doesn’t get a commission. Now she can grow her business because she solves the problem. So that’s really the top way is identifying high net worth individuals that have the capital gains or estate tax problem and providing a solution by partnering with us to educate people on the Deferred Sales Trust. Steve Moskowitz: How about when somebody comes to you and he says, “You know what, I’m sick of taking out the trash “and getting a call at three o’clock in the morning, “‘I can’t find my keys, open the door, “‘and fix this, and do that,'” is there some way that you can help with this? Brett Swarts: Right, the toilets, the trash, the liability. Yes, because once the funds are sold in the Deferred Sales Trust, you don’t have to put it into anymore real estate. It could just be put into liquid investment grade securities. And we have clients that in fact, we had a client, his name’s Chuck and he is outta Arizona. And for 23 years, he managed an apartment complex, student housing outta Tucson, Arizona, and he’s selling for about two and a quarter million, and he has no basis, and he’s like, he goes, “I also have no more motivation. “Brett, I’m 70.” He’s like, “I just wanna just relax and retire.” And he calls me, he goes, “I got a huge tax bill.” And so he closes the deal and I said, “Chuck, what are you most looking forward to?” And he goes, “You know what it is Brett, “not even anticipating having to get a phone call. “In fact, I’ve lost my number, it’s gone. “No one’s calling me, there’s no one to call me. “There’s no student that’s gonna call me “in a random time to fix a random thing.” And he goes, “Brett I know I can hire a property management. “I did that for a while, “but no one takes care of your property like you will. “And so I just kinda did it myself.” He goes, “I’m so looking forward to not having “any more toilets, trash, liabilities, “but really the phone calls, I don’t have to worry. “I’m never gonna get a phone call “from that property ever again.” Steve Moskowitz: I understand, and everything you’re telling us is so great. So tell us, how do you build a tax deferred wealth plan? Brett Swarts: So step one is clarify your goals, your goals for your family, your wealth, your time, your energy, your location, right? That means different things for different people. Your charitable cause giving goals, right? All of that. And if the more you can clarify that vision, the more that vision can pull you in that direction. So that’s step number one is you have to do the homework of clarifying what you want, what your family wants, what your legacy’s gonna look like. And then number two is identifying what’s standing in the way? What’s standing in the way, is it the tax, right? Is it the partnership? Is it estate tax? Is it cash flow? Are you selling something that has a really low cash flow, but at very high value? Like something like cryptocurrency or like a primary home or… What is the problem that you’re trying to solve for? So define that, right? Bring again, bring that Rubik’s cube with all its different colors, and which leads you to step number three is you find the who, you don’t be the how. You call someone like myself or Steve and you help to clarify which solution, potential solution could fit and solve your problem. And then from there you execute on the business plan, right? I mean, of course you do due diligence on the structure, on the strategy, on the people, and everything in the background, but then you just literally plan it out and execute on that to achieve your wealth plan. Steve Moskowitz: What do you do if somebody comes to you and says, “Hey, Brett, I have this multimillion dollar “multifamily property, it’s got a bunch of debt on it, “but I’m gonna have some capital gains. “What can you do for me without doing a 1031 exchange”? Brett Swarts: Right, so we wanna define A, what’s the adjusted basis? And B, what’s the actual debt? And C, what’s the sales price? And so there’s different mechanisms to solve different challenges. And this is a good time to bring up what’s called the mortgage over basis or debt over basis challenge. And in fact, we just did the deal in Colorado last week for our client. He had about a million dollars of debt over basis, and he sold about a $4.2 million property, okay? And I think his debt was right around about two and a half, okay? And so we had to solve first that debt over basis ’cause the Deferred Sales Trust and the Deferred Sales Trust Plus doesn’t solve debt over basis. Fortunately enough it’s an investment property, so he was able to move it to a 1031 exchange to start with, okay, one of our strategic alliances. And then we did a partial Delaware Statutory Trust, okay? Now, the unique part about the Delawares that we work with, and this is why we love the Delaware is that they secure these big tenants and this particular tenant was in Amazon, it was Amazon. A very large property that had a very, very high LTV, loan to value, which means he only has to put up a little bit of equity or 15% to 18% of equity to replace the debt. And so in that scenario about 150 to 180,000 was the equity to replace that $1 million worth of debt, okay? So that’s really important is again, defining the problem, then defining the solution that’ll solve it. And so we did that partial Delaware, okay? And then the rest of it went to the Deferred Sales Trust, which gives them all of the entrepreneurial freedom, location freedom, liquidity freedom, diversification freedom, right? Financial freedom, more cash flow. Doesn’t have to do the toilets, trash and liability anymore. And so I think that answers part of the question, Steve. Did I miss anything there? Steve Moskowitz: No, it was real good. And as we’re running outta time, getting ready to wrap, tell me, what’s the largest wealth transfer in the history of the planet and how can a DST help? Brett Swarts: Yes, according to the American Bankers Association and a bunch of other studies, they found that there’s about $32 trillion that’s gonna transfer from the baby boomers to the millennials in the next 20 years. And in fact that same study found there’s about 10,000 baby boomers turning 65 every single day in the US. And there’s about 77 million in the US alone. 50% of all of their wealth, Steve, is tied to high end primary homes, businesses, and commercial real estate. That 50% of the wealth is illiquid, highly appreciated, and people want to retire and/or diversify, okay? And so you look at that, this is a huge opportunity to preserve more wealth and defer a lot of tax upon the exit of these assets to the next generation. And so the question is really this, Steve, are you gonna use the legal framework that’s in place with proven tax referral strategies to move funds outside your taxable state, defer the capital gains taxes, maybe to give it to charities you believe in, right? Or are you not gonna do the planning, not gonna hire the professionals and not gonna execute that plan and monies are gonna go to the government, a lot of it? And I think most people would agree, no matter what side you’re on, that they’re not very efficient at using our tax dollars to do the things that they should be doing. In fact it’s the opposite. They’re very inefficient and at times very frustrating, right? And so our goal and our incentive, and the IRS is too as well, we believe their incentive is to install or instill or incentivize ’cause they can’t force us to do things, but they can tax incentivize us to do certain behaviors that actually stimulates the economy, that moves money in a way that creates and promotes businesses and jobs and all of these things. And so we need all hands on deck. We need every educator out there, professional out there to know what the rules are so we can execute this for this wealth transfer. Steve Moskowitz: Brett, I’d like to thank you so much. You’ve given us such wonderful knowledge. And if somebody says, “Hey, I’d like to talk to this Brett some more,” how do we get ahold of you? Brett Swarts: Great question, Steve. You can go to capitalgainstaxsolutions.com. And I also wanna point you to the new book that’s coming out. It’s called “Building A Tax Deferred Exit Strategy”. And it’s the proven playbook for unlocking your ideal wealth plan when selling assets of any kind for yourself or your clients. We have some really cool people in there, like a guy named Kevin Harrington from “Shark Tank”. He’ll be in the book, which is really neat. And then we have other amazing, about 12 other amazing contributors to the book, economists, multi-family syndicators, financial advisors and so on. So check out that book, go to capitalgainstaxsolutions.com. Also check out our YouTube channel and our podcast where we have a ton of free content as well. Steve Moskowitz: And do you have a phone number for us? Brett Swarts: Oh, yeah, 916-886-2986. It’s 916-886-2986. Steve Moskowitz: And if you’d like to talk with us, you can give us a call at 888-tax-deal. That’s 888-T-A-X-D-E-A-L, 888-tax-deal, or moskowitzllp.com, M-O-S-K-O-W-I-T-Z-L-L-P.com. I’d like to thank everybody for listening or viewing. And until next time, we’ll look forward to saving you some more taxes. Outro: You’ve been listening to the Practical Tax Podcast, with tax attorney, Steve Moskowitz. To hear more podcasts, go to Moskowitzllp.com/practicaltax. The information contained in this podcast is based on information available as obtained at the date of it’s release. MoskowitzLLP and it’s affiliates are under no obligation to update this information as changes occur. Applying this information to your specific situation requires careful consideration of all factors, which may be applicable, and any information is not to be considered tax advice or legal advice. Further, this is attorney advertising and the facts and circumstances displayed in this case are dependent entirely on the facts of that particular case. Please consult your tax advisor before acting on any matters discussed. Enjoying the Podcast? Take our quick survey to let us know what we’re doing right and what you want to hear more of!


11 Jul 2022

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Jake Harris's insightful interviews on The Catching Knives Show are a great source of inspiration, knowledge, and actionable strategies. In this new “What I Learned...” episode, Jake will break down his conversation with Brett Swarts to give you the most important takeaways to remember. He will reveal some small snippets of what is a deferred sales trust and how you can utilize them to create a better position and gain future value.He will talk about what Brett did to help some clients with cryptocurrency and how to utilize a deferred sales trust to never have to work again.You will learn what are installment sales and how they work, what is the most effective way to create next-level tax strategies, what is a 1031 exchange and how the deferred sales trust gives an alternative to it and much moreListen now and enjoy!What You’ll Learn in this Show: How can you utilize deferred sale to create a better position and gain future value What is a 1031 exchange and how the deferred sales trust gives an alternative to it The #1 tool for creating wealth, legacy, and generational type investment strategiesThe best way to create next levels of tax strategiesAnd so much more...


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In today’s episode of Discount Property Investor Podcast, David Dodge has a special guest Brett Swart, Founder of Capital Gains Tax Solutions, helping people learn and implement capital gains tax strategies through his company. Capital Gains Tax Solutions. Brett works primarily with high-net-worth investors to develop deferred sales trust tools to solve capital gains tax deferral limitations. In this episode, Brett defines a deferred sales trust, explains the difference between a 1031 exchange, and when this strategy works for real estate investing. If you are interested in Real Estate this is an inspiring interview.Links Mentioned in Today`s Episode Website: https://capitalgainstaxsolutions.com/Youtube: Capital Gains Tax Solutions


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EP#213 Defer Capital Gains Tax with Brett Swarts


Today I chat with Brett Swarts from Capital Gains Tax Solution. Brett helps his clients defer their capital gains taxes and enjoys planning exit strategies with sellers of bitcoin, real estate, and businesses and then determining whether the Deferred Sales Trust is a good fit or not.  He assists people in either permanently escaping the 1031 exchange or saving a failing 1031 exchange. He is also the host of the Capital Gains Tax Solutions and Expert CRE Secrets Podcasts and YouTube channels. Episode Spotlights- Solving capital gains tax solutions without 1031 exchange- Planning prior to the close of escrow- When is the right time to approach an expert to plan exits- Is deferring capital gains taxes too good to be true?- Brett shares his value add multifamily deals- Dealing with challenges in a deal as an LP investorBook Recommendations- Seasons of life Connect with Brett:Website: https://capitalgainstaxsolutions.com/ Linkedin: https://www.linkedin.com/in/brett-swarts/Youtube: https://www.youtube.com/c/capitalgainstaxsolutions Grab your freebie - Tips for Multifamily Investing at www.ushacapital.comFound this episode insightful? Show us some love by spreading the word on social media or  rating and reviewing the show here - https://podcasts.apple.com/us/podcast/multifamily-ap360/id1522097213Follow Rama on socials!LinkedIn | Meta | Twitter | InstagramConnect to Rama KrishnaE-mail: info@ushacapital.comWebsite: www.ushacapital.comFollow Rama on socials!LinkedIn | Meta | Twitter | InstagramConnect to Rama KrishnaE-mail: info@ushacapital.comWebsite: www.ushacapital.com


12 May 2022

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Brett Swarts is the Founder of Capital Gains Tax Solutions. He is a licensed California Real Estate Broker who holds series 22 and 63 licenses and Host of 2 Podcast, Capital Gains Tax Solutions Podcast and Expert CRE Secrets Podcast. Each year, he equips hundreds of business professionals with the Deferred Sales Trust tool to help their high net worth clients solve capital gains tax deferral limitations. His experience includes numerous Deferred Sales Trusts, Delaware Statutory Trusts, 1031 exchanges and $88,000,000 in closed commercial real estate brokerage transactions. He’s an active commercial real estate broker and investor with brokerage experience and ownership in multifamily, senior housing, retail, medical office, and mixed-use properties. Get in touch with Brett: www.capitalgainstaxsolutions.com If you want to know more about Dr. Jason Balara and the Know your Why Podcast: https://linktr.ee/jasonbalara Audio Track: Back To The Wood by Audionautix is licensed under a Creative Commons Attribution 4.0 license. https://creativecommons.org/licenses/by/4.0/  Artist: http://audionautix.com/ 


4 May 2022

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22 Mar 2022

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Brett Swarts is considered one of the most well-rounded Capital Gains Tax Deferral Experts and informative speakers in the U.S. He is the Founder of Capital Gains Tax Solutions, is an exclusive Deferred Sales Trust Trustee, host of the Capital Gains Tax Solutions podcast and an eXp Commercial Multifamily Broker in Sacramento, CA. His strategic alliances and clients are challenged to create and develop a tax-deferred transformational exit wealth plan using The Deferred Sales Trust (“DST”)  so they can create and preserve more wealth or help their clients do the same. Brett is the host of the Capital Gains Tax Solutions podcast. Each year, he equips hundreds of high net worth business professionals with the DST tool to help their high net worth clients break out of capital gains tax jail. Mr. Swarts is passionate about educating high net worth individuals in capital gains tax deferral with a Deferred Sales Trust, how to divest from a business, cryptocurrency, highly appreciated stock, primary residence or investment real estate to gain freedom from feeling hostage to capital gains tax or a 1031 exchange, then invest back into a new business venture or investment real estate at any time [all capital gains tax deferred] which he calls optimal timing. His experience includes numerous Deferred Sales Trusts, Delaware Statutory Trusts, 1031 exchanges and $350,000,000 in closed commercial real estate brokerage and Deferred Sales Trust transactions. He’s an active commercial real estate broker and investor with brokerage experience and ownership in multifamily, senior housing, retail, medical office, and mixed-use properties. He is a licensed California Real Estate Broker who has held series 22 and 63 licenses.   Brett was formerly an associate at one of the largest CRE Brokerage firms in the country (Marcus & Millichap), is now a Sacramento Multifamily Broker with eXp Commercial. Brett lives in Roseville California, with his wife, Melanie and their 5 children. ~~~~~ A Crypto Gaming Institute Production. Website: https://CryptoGaming.Institute Twitter: https://twitter.com/CryptoGamingI Discord: https://discord.gg/VKMVr8nSJt Podcast: https://cryptogaming.institute/podcast YouTube: https://www.youtube.com/ben-gothard?sub_confirmation=1 YouTube Membership: https://www.youtube.com/c/BenGothard/join NFT Collection: https://opensea.io/CryptoGamingInstitute Podcast Support: https://anchor.fm/crypto-gaming-institute/support CGI Social Token: https://bitclout.com/u/CryptoGamingInstitute


3 Mar 2022