#169: 2024 Capital Gains Tax Savings: Leverage Deferred Sales Trusts
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Welcome back to The Richer Geek Podcast! Today, we have a fan favorite returning: Brett Swarts, Founder of Capital Gains Tax Solutions, an exclusive Deferred Sales Trust Trustee, and host of the Capital Gains Tax Solutions podcast. In this episode, Brett shares insights into common strategies for handling taxes with real estate transactions, demystifies the workings of a deferred sales trust, and discusses who it’s a good fit for and who it’s not. Plus, learn about Brett's best-selling book "Building A Capital Gains Tax Exit Plan," which topped the charts on Amazon in the Real Estate Wealth categories.
In this episode, we’re discussing…
Overview of tax deferral landscape in 2024
Potential changes in tax laws and implications for investors
Understanding the role of Deferred Sales Trusts in wealth preservation
Exploring strategies for diversification and liquidity
Debunking myths and misconceptions surrounding tax deferral options
Case studies illustrating successful implementation of Deferred Sales Trusts
Combining 1031 exchanges with Deferred Sales Trusts for optimal results
Building a comprehensive capital gains tax exit plan for long-term wealth preservation
The significance of flexibility and freedom in tax planning strategies
Resources from Brett:
LinkedIn | Capital Gains Tax Solutions | Expert Tax Secrets
Building A Capital Gains Tax Exit Plan by Brett Swarts
Resources from Mike and Nichole:
+ Read the transcript
Mike Stohler
Hey everybody. Welcome back to another episode of The Richer Geek Podcast. We have a fan favorite, returning Brett Swarts. He's considered one of the most well rounded capital gains tax deferral experts, informative speakers on the West Coast, his audience are challenged to lean into multiple capital gains tax deferral strategies. That's really important now, so you don't have to pay any of the high taxes that are coming out of DC. Welcome back, Brett. How are you doing?
Brett Swarts
Hey, Michael, better than I deserve. Good to be here again. Thanks for having me.
Mike Stohler
Yeah, absolutely. You know, whether it's kind of crazy, we're in January 2024, as we record this, and it's kind of crazy all over the place. Hopefully, it's warming up a little bit where we're at. But hopefully, let's talk a little bit about what are you seeing in 2024, with tax deferrals, anything coming up, anything that we should know, any changes coming on the horizon? Talk to us a little bit.
Brett Swarts
As far as capital gains tax deferral, nothing that we see that it's changing that we do have to be aware of in 2026, we're going to have the lowering of the estate tax exemptions, they're going to drop to about 12 million, so you can do some preparation for that prior to 2026. So 2024, which is two years before that's an important thing to think about. But as far as capital gains tax, it's still high, it's probably gonna go higher, if it goes higher. And that the taxes are rising said the problem becomes more and more, as the election is going to be big. Obviously, it's a big thing. Which way the government goes with that, but nothing that's like pressing the change, like tax deferral, like the 1031 exchange was challenged a couple of years back, but that's kind of quiet right now. But you never know, when they bring that back up to try to take it away. But so it all seems pretty quiet on the capital gains tax front.
Mike Stohler
Yeah, that's good. Yeah, I do remember a couple years ago, they're like, "Wait a minute, there are people that are deferring their taxes?" "No, we want to tax it, get rid of the tax deferral." Kind of the big thing with tax deferrals. And I see it also is, as I defer, and defer and defer. Now all of a sudden, my assets are getting larger and larger. And then the amount that I have to defer, it gets harder and harder to be able to place that, it's like, what are we going to do with, it was easy when it was 50,000, 100,000, maybe a million dollars to text it for now that when you get into three, four or $5 million on the sale, talk to us a little bit about some of our options that are out there. What can I see, Deferred Sales Trust, statutory trust, all some of the different things that are available for when we have, I can't place it, because when we have so many days, and if you get too, in a rush, I might make a bad mistake getting in something because I have to place it.
Brett Swarts
Yeah, I think you have to really have a tax flow mindset as coupled with your cash flow mindset, right, most of us focus on cash flow, where we're making on the return on an investment five to seven, seven to 10, or an IRR over a period of time. But when you add the tactical element, it really changes the game. And part of that is looking at your ROI, your return on equity, as compared to if you were to sell and move that equity somewhere else. But what the roadblock people are seeing right now is interest rates have obviously gone higher this past year. And you're looking at cap rates that are still maybe not that much higher than they were a year ago, at least not in proportion to how much interest rates have increased. And so you have what's called a negative arbitrage that's going on where I might borrow at 7%. But my cap rate may only be five, coupled with not a lot of value, add opportunities out there, because a lot of those had been gobbled up the last 10 years and people had fix and flip those. You come in kind of a stalemate, and we're sellers are not willing to sell because they have capital gains taxes and B, they don't want to overpay for properties, because its rates have gone higher. And so what we really want to focus on is how do you connect tax flow cash flow and what we call debt flow to debt for granite for many years, because it was so low? Well, now it's much higher. And so this is part of the challenge, you can have a great deal it's operating. And it's fantastic on collections. It's actually pretty good on the NOI (Net Operating Income), but the debt has gone sour or it's gone south or really is gone north, it's gone higher, which means your NOI, you know minus the debt service, right? Your cash flow is much lower. And so as an example of this, we have a client or potential client and just talk to him today. He's got a rental house in the $2.7 million range in the Bay Area of California Silicon Valley. Well, he's renting the property for $5,500. His debt is 1.5 million, and his debt service is about 7000 per month. He actually has good financing in the high threes, but he's been in negative cash flow for a while now. The biggest thing is he's been cashed out refined which we're cash tax free when you do that. But then it gets recaptured. It can if you have debt over bases and got to really look at this with a 3D lens, right?
You gotta say, What am I trying to do? Am I trying to get more cash flow? Yeah, that's what he's trying to do by trying to get out of debt? Absolutely. Does he want to retire? He does. He's actually in his 70s. And he wants to fully retire. And that's why the 1031 exchange, he doesn't know his friend, right? It's not our friend when we have to overpay in a short period of time for properties that we don't necessarily want to be in. And you want that diversification, that liquidity and that debt freedom. So you got to use a different tool. And so it's not always the hammer, the 1031, we use the Deferred Sales Trust in this scenario, we can get his debt paid off, get them diversified, get him liquid, and get them passive. Now should you want to be active you can be again with the trust, but that's really the key. It's like what solution is going to solve the problem you're trying to solve. And that's why we love the Deferred Sales Trust here, Capital Gains Tax Solutions, because it solves the fundamental freedom and flexibility motivation for most of the Americas, you know, high net worth individuals, and you've got to have flexibility, and you've got to have freedom. And if you can do that, if the Deferred Sales Trust can, then you can really trade in any market. And that's the beauty. The Deferred Sales Trust, high or low, any asset type of any kind, we can buy and sell, sell. Yeah, we believe the DST is perfect for a time like this.
Mike Stohler
Yeah. So what do you think about it? Some people out there say, "Oh, you know, Deferred Sales Trust is, especially the IRS doesn't like it." It's listed as just kind of almost a scheme, with the distractors out there. Talk about like, they go on the internet, they see pros, the cons, the IRS doesn't like it, of course, because you're deferring things. What do you say about the detractors out there that say, I don't know how this Deferred Sales Trust really works? Or if it's legit, is it something that people are just gonna feed me to death? Talk about some of the ponds out there that we're seeing on the internet?
Brett Swarts
Yeah, well, let's start with the legality, right? So the neat part of the Deferred Sales Trust, it's batting 1, 000, meaning it's never had a single change on any of the audits, 1000s of closes billions and billions and billions of deals of volume over the years, and most of the audits have actually been in California. So it's called "No Change & No Findings”. It's literally perfect. And it's very rare to find one that makes you say it's the best edit tax deferral strategy, your CPAs never heard of. It's worked every time it's ever not worked. But there are those out there that try to couple it with other strategies that are actually on the watch list that don't work like the monetized installment sales is a great example. It never worked unless maybe you were a farmer. But people have used it since it's been on the IRS watch list. And so we do have those in the 1031 exchange community, who would like to couple us with those because we are a competitor to the 1031 exchange. Unlike the 1031 exchange, we work for any asset of any kind of cryptocurrency business sales, I in primary homes, also investment real estate, whereas a 1031 only works for investment, real estate. So there are those that write things on the internet, but it's like the dry buy media. They're going 100 miles an hour, trying to see what sticks to the wall to get people to click and just to do a 1031. But we just continue to close deals like we just had a $13 million deal in San Diego, we just did another two deals for a client at a Colorado 11, 46 million in Texas, New York, New Jersey, Florida. $6 million business sale in Menlo Park, San Francisco, we deal with all over the country at Los Angeles, Arizona. And we just keep closing deals. So I think that's the first thing to know that there are those that don't know about the trust or don't want to know about the trust. And a lot of commercial real estate brokers want to keep you in the 1031 exchange, because that's the way they get paid. QI companies want to keep the money where they can get paid. By the way, I'm a California real estate broker myself who sold over about $500 million in commercial real estate, mostly multifamily properties, and done Delaware Statutory Trust and the Deferred Sales Trust. And so you kind of follow where that's at. But you also can't blame them. And they just don't know about it, right? They don't know. And they're not comfortable because they don't understand how to execute it. And that's where we have our competitive advantage where, what we know how to execute and we keep doing that. On top of that, we provide lifetime Audit Defense, which is really important, because you want to be able to sleep well at night knowing that if the IRS does come knocking, that you can defend it, and we have defended against the IRS. About two dozen times over the years, and we've never had a change. And so it was also pushed back because the IRS doesn't like it. The IRS may have opinions on different things, but they're not the ones who make the laws, right? They just kind of enforce the collection of the tax. And so I think sometimes they get misconstrued as because they're collecting the tax. They don't like the 1031 or they don't like IRAs or 401(k)s they actually would say they do and it's in their best interest to like it because it actually spurs economic growth with the Deferred Sales Trust. You have sellers that are selling the assets like we did an $8 million deal on Palo Alto. Well, that's a new property tax for the state of California, right? That's a commission for that sales professional, right?That's a mortgage origination fee for that mortgage originator, and essentially, there's taxes on all of that. And so who wins the most is actually the IRS. Now, the person who's selling he gets to defer his tax. But guess where the money goes, the money goes into business ventures, stock market, real estate, which produces more jobs, more tax revenue, which the IRS wins again, right? And so it's actually if you pull back the layer a little bit more and think about it, the reason that 1031 exchanges, the IRAs, the 401(k)s the deferred sales trust are around is actually the government's best interest because it spurs economic growth, otherwise, what would you do, you wouldn't sell the asset, which means no more property tax, no new property taxes, no Commission's to pay tax on, you might even run the property into the ground, which means you lose the value there, you lose the tax revenue, or you might even lose the renters to have housing, right? Because if it's a rental property, people that can't take care of properties, or don't want to anymore, we'll just let it go to waste. And now there's less housing. And so these are all the reasons why these strategies have remained intact, even though people out there may not want you to know about it. But this is why we started our mission to tell everyone about it, educate everyone on it, and literally just keep closing the deals. And when you close the deals, that usually speaks louder than any of the detractors out there, make sure yeah, that's completely correct. And you know, the main difference, and we'll get into what exactly deferred sales trust is, you know, what, the 1031 I'm swapping it, it's got to be a like exchange, but in a deferred trust, sales trust, you actually have to sell it. Correct. It is an actual sale. And the key difference is it's kind of the method of payment going into the thing you sell it. So for those people to talk a little bit about that. But then, what exactly is the process? You know, I'm a third party kind of like 1031. Do you have that? Except, you know, instead of them holding, controlling everything? Is it different? Is it the same? What are the steps? If I have an asset, and I want to do a deferred sales trust? What are the steps to do it? Yeah, first of all, let's define the deferred sales trust. And let's talk about the process, right. So the deferred sales trust is just an installment sale with the trust. Okay, we would all know, or if you don't know what an installment sale is, is basically where the seller can carry back paper, meaning he's becoming the bank or the lender to the buyer. So for example, Mike has a hotel for $10 million, he owns it free and clear, is zero basis, which means he has a big tax bill, if you were to sell it right now, he could finance Joe down the street, Joe could put a $2 million down payment, he could finance the other 8 million, Mike only pays tax on the two, the first the other 8 million. And as Joe pays Mike back over time, Michael pays taxes slowly, it's known as installment sale IRC for 33. Well, that's what the deferred sales trust is, the difference is we're going to ask Joe to come with the full 10 million already say, Joe, we're not going to finance you, you will get cash or go get a bank loan, you know, however, you're gonna get the money come with the money, but you're gonna cooperate with this trust, and the trust is gonna buy the asset from Mike for 10 million, and S might carry a 100% financing, and then immediately sell it to the ultimate buyer. And what happens is, is a sale to a trust, right, like you said, the trust sells that to the ultimate buyer. And so there's really three parties in the transaction. And when the smoke clears, the buyer has titled the same way he would have normally. And Mike has a promissory note for 10 million typically written in at 678 9% Return on the money. And that's the interest rate that's on it. And we could go make the money right? Now we go invest it, but that's the process of this. And so yes, the capital gains tax, which is the trustee, we're sort of like the Qualified Intermediary, or sort of like a 401k company a little bit, right. But these individual trusts only do business with the seller. And their spouse if they're married and they can pass on the promissory note is what you now own Mike, right. You don't own the trustee, the owner is taxable. But the neat part about it is now this trust can be invested into different things that you would like to invest in. And it can be diversified. And there's no timing restriction to have to put it into something in a 45 day window or 180 day close. And so that becomes the beauty of the deferred sales trust you put time on your side. So we just released the best 1031 exit plan, where we provide the 1031 service with the backup plan, because you might be stuck in, Brett, I actually do like real estate, and I think I can find a deal right now. Great. We love that too. When you can find a 1031 deal. We'll go by it. And you can go for the 1031 and the best 1031 exit plan. And in case it fails, we have the deferred sales trust to save the day. And that's cool it's like that parachute when you're flying 100 miles an hour for that 45 day one 80 sprint, and you can jump out float down safely on the deferred sales trust versus just crashing the plane and paying the you know 20 3040 50% In tax. And so that's the best 1031 exit plan. We will help you with that. So we're not against 1031s
Brett Swarts
We're just again, that's the outcome of poor purchases with a 1031 when you overpay, whereas the deferred sales trust can be that safe harbor that gives you a chance to, to wait and see when the market makes sense for you to buy.
Mike Stohler
Can you combine the two?
Brett Swarts
Yeah, absolutely. In fact, we do that all the time. We do that all the time, because sometimes you might find a perfect deal. So we did a deal with a client named Craig in Texas, he sold a ranch for about 7 million. And he was looking at a place to buy in Oklahoma, and another place to buy in South Carolina. He bought both of those. But combined, the only equaled about I think about five, 5 million, so you had an extra 2 million of boo. And so we used that extra 2 million instead of paying in tax on that I went to the deferred sales trust. And so that's the same thing. So on the best 1031 exit plan, you can combine multiple strategies. And sometimes it's a Delaware Statutory Trust that we might use to replace debt over bases. Think of it like a Rubik's Cube, everyone's situation is a little bit different. And that's what's unique about us is we're going to take this cube, and we're gonna say, "Mike, what are you trying to solve for? What are you trying to do?" I want all blue on one side, all yellow, and all red on this one side? "Okay, great. Let's move that around to a line." And at times, it might take a 1031 regular, 1031 exchange, Delaware Statutory Trust, 1031. And then a Deferred Sales Trust, which is the one that most people want to get to ultimately, because of the flexibility for timing, diversification with the wealth, and ultimately, a lot of other entrepreneurial clients, they just want their powder to be dry, ready to pounce on deal when it makes sense?
Mike Stohler
Yeah. And that's what all of us want, because we don't want to pay taxes or, more than what we feel we should but in the end, they get it. Now, you just throw in another term in there. It talked a little bit about the Delaware Statutory Trust. Now, what does that, how does that differ?
Brett Swarts
Delaware Statutory Trust is just another part of the family of 1031 exchange. Okay, think of it like a commercial real estate syndication, where you're a passive investor, buying interest in a trust that owns 1235 assets, right? Where it's direct ownership, it's kind of like a tenant in common, but your 1031 wanting your equity into a partial interest of a trust, of which you're a small minority owner, and you give up all control, all liquidity, all diversification, some of the downsides to there's huge fees. And typically seven to 10 years holds. Now, some of the upsides are beautiful properties, proven operators, typically, really good locations, good tenants, but the returns are maybe around 5%, a lot of them, right? And you're you're basically just I call it sleepy mailbox money, nothing wrong with that, if you that's all you want, but know that your returns are gonna be pretty low, you're going to be a lot of fees involved and, and you're buying in the same market, you're sold high, and maybe you're buying higher with a poor interest rate. And so again, it gets to that 1031 blockbuster, but they do sell mortgage over basis. They're also great, you can get lots of debt over bases offset with the deals that we do with the Delaware Statutory Trust, which is typically the only one really used for that. And number two, they do maintain a stepped up basis, which is a great stepped up basis is fantastic, right? Unless you have a state debt tax, but now you're in trouble because you're locked into that deal. And so you're going to have to just look at what you're trying to solve for and figure that out. The last thing that it's good about is non recourse debt. I mean, the debt is typically not in your name, it's in the company's name. And these are very big tenants that are in place or big apartment complexes, which are pretty safe. So just keep that in mind. But the worst thing about it is not being liquid, not being diversified. Not having any control. And a lot of our clients say "No, thank you. I'll use it to the extent that I need to replace debt over bases. I want the majority of the Deferred Sales Trust."
Mike Stohler
Yeah. And again, everybody, we have Brett Swarts, on with us. Let's talk about this book that you came up with last year. I heard it's doing really well.
Brett Swarts
Yeah, absolutely. It's called Building A Capital Gains Tax Exit Plan. Hit No.1 Best Seller on Amazon for the Real Estate Wealth categories. It's a phenomenal book with really great, great smart minds. In fact, they say to get in rooms with people that are smarter than you. Well, that's what I did with the book, Mike. So I got the room. I've gotten the book with people that were smarter than me, people like Kevin Harrington from Shark Tank, billionaire. And he talks about how to make a mentor to millions and really give back and his story of entrepreneurship. People like Don Wenner, who's the head of DLP Capital who's built, in a phenomenal and multifamily housing, really moved with what he's built. There's pretty incredible people like Joe Fairless, Michael Blank, and Neal Bawa. People like Tyler McBroom, who's Tony Robbins's CPA, some really smart people that talk about building wealth in a smart, efficient way, building businesses, and so it is building a capital gains tax exit plan because ultimately, when everything happens with building wealth, there's going to be an exit and so you gotta be thinking of a mindset of how do I build a plan along with building my business or my room?
All sit on our wealth. And they go hand in hand because you don't want to get caught with a huge tax. And so I tell my story of how I came about 1031 exchanges, my real estate career, my entrepreneurial journey. And of course, the Deferred Sales Trust and a giveaway has many, many secrets that I can give away so that people can be equipped with the strategy to overcome the false beliefs of it is too good to be true my CPA would know about it. I do have to give all control, how does it work with a trustee? And what are the fees, how to make the DST an investment, not an expense. And I try to bring it all together with some of the best minds that have vetted the deferred sales trust. And so that you can start to say, "Wow, this actually does work, man, this is incredible." People like Brian Burke, a great example. Brian with Praxis Capital said, You know, Brett, I've been in business 30 years...he's one of the most respected guys in commercial real estate, syndication and funds. And he goes, I'm sitting on pull this off, you're the first one, and they're one of our top strategic alliances. And so when you start to get those types of people that are running with you, you'd say, look, give it a shot, give us an opportunity to talk to you about well, how it works, why it works, why it's legal, and how it can unlock the freedoms that you're looking for. And that's where the DST, we also believe it's just not a tax deferral strategy. It's a wealth building machine. Once you have the team in place to execute the business plan on how we can eliminate the estate tax, give you a new depreciation schedule. But a lot of times he's giving you that confidence to know that it's a temporary failure, hey, I've got a backup plan, right? I don't have to settle for a deal that otherwise, I would never have bought if it wasn't for the tax in the 1031 exchange forced me into it.
Mike Stohler
Yeah, and I wish I'd known about this earlier in my career when I was doing a lot of multifamily because it was the anxiety and the stress of saying I've got to find something in the heart, to the market. And the only thing I can find about this property is that people don't want real estate they've already taken, right. So I'm being kind of forced to do something and then like, Okay, now what am I gonna do? Am I gonna hold it? How expensive? Is it going to be to turn this thing around? When I could have, you know, a company like yours, just say, hey, leave with us? Is there a time period that you have to hold it within your company before I pull it back out and use it? What is that kind of process in case, six months from now? It's like, Oh, something just came up. And I like to buy it.
Brett Swarts
]There's no time frame. It's totally flexible. So you don't have to force anything. So that's the beauty of the Deferred Sales Trust: you get time as your friend. Time isn't your enemy. And time horizon is the number one key and a fun foundational ingredient for any investment. You got to look at that. Let me bring sly for you, though, right? I have a client, Warren and Catherine. And they own a $2.5 million apartment complex in Sacramento, California. They had actually done a multiple 1031 exchanges, and they bought from a Manhattan Beach duplex, they moved that up to the 15 units. And so for them, their NOI was about $120,000. So you do the math $120,000 on 2.5 million. So it's not a bad ROE (Return on equity). But it's not actually great. And they're also looking at rent control. They're looking at fires that are challenging California Insurance costs have just skyrocketed. Frankly, they've made multiple millions, and they're ready to travel more with their kids. In fact, they had two twin daughters a little bit later in life, and they're going bread. I really just like to spend more time with the family and not have to deal with traffic driving back and forth to the property. And I had property management too and that's a great answer. 100% occupied property. And it's a beautiful property, right in the foothills of Sacramento. But long story short, we looked at the Deferred Sales Trust, and we ran the numbers and I said, Good morning, Catherine, I go, we can increase your NOI (net operating income) if you think you'd like this net of cost and fees. $290,000 from 120. How would you like a 60% increase in cash on cash return? None of the toilets, trash and liability, the ability to go back into your own deal if and when you want to? And to get the deal to rent control and in the nonsense that California is putting you through and they go, Where do I sign up? Right? And so we close the deal. And I asked Warren. I said Warren, what's the biggest thing? He goes Brett, I didn't realize how much of a burden this thing was. I don't remember how much time and energy it was on me. And more than that, how much it was taken away from our family, my time with my twin daughters. And he goes, you know, just the toilets,trash, the termites. He goes, those are the three T's that were just really frustrating. I go, "you know, Warren it sounds like it sounds like he traded the three T's for the two T's that matter the most". And I said, "your twin daughters". And he goes, "Brett, that's exactly right". I traded the right T's for the right T's and I increased my cash flow. I mean, this is absolutely amazing. He loves it. And we love the transformation it can be for his family. That's ultimately what we want to do is we exist to unlock capital gains to multiply wealth and freedom. Right and ultimately impact for him is his family, the legacy he could spend with his daughters and still increase his cash flow and have all of the things that ultimately what people want, which they buy real estate or invest into to get freedom. But when those assets were like another client of ours, Gary Lester, he had $10 million in mobile, home parks, and five different parks. He's gone, Brett, these parks are taken over, I started out as a side thing to just do for retirement, I've really started to knock it out of the park, when he goes, it's just so much. He goes, you're telling me I can increase my cash flow? Get out of the products and the management? I can still get back in if I want to? And I'll answer your question now. And so for Gary, we've been in passive real estate deals, liquid investments waiting for the market shifts, and there's Warren and Catherine. And we've been selective on certain opportunities. And part of what we move into is like a multifamily lending fund that pays about 10%. The neat part about it is that it's about 30 days liquid, right? So Mike, I can put into a million today, start making about 10% per year, but any 30 day period, I can raise my hand and get a Parsh portion of it out or all of it out, and still have made 10, about 10% of the money, which is pretty awesome. And so you look at that you don't have to be tied to the stock market, you can also put to the t make 5%. But then when you want to you can partner with the trust. And this is the best part about all of this. In fact, I wouldn't have started the company without this concept that you can start an LLC, Mike, and that LLC can joint venture partner with the trust or the trust both up with all of the money. And you are the managing member of that all tax deferred. So you haven't paid $1 in tax yet, right. You only pay taxes, you receive it personally. But this isn't a personal distribution. This is a joint venture partnership into another hotel business or hotel development or multifamily deal or, or a new business venture. And that's the beauty of this, that now you are with the trust as a joint venture silent partner, running the deal that you probably wouldn't be running anyways. But you would already have to pay tax to get it but now you're using the government's money along with your money to fund it all tax deferred. And so that's the concept there, the joint venture LLC partnership, I've got a whole YouTube channel that talks about this in extensive detail. But you could have capital gains tax, which should not come to you to learn more.
Mike Stohler
It's kind of like all of our dreams. Sometimes you're a GP for so long, and you're just dreaming, it's like, Please, can I just take some more money, and I'm getting older and say, can I just be the LP and something, and get a good return. It does kind of sound like a dream. Just because the headaches, you know, it's just "My God, some of our assets or home runs, and some of them are like gone, after COVID", just COVID kind of changed everything with some of these asset classes.
Brett Swarts
It is a time to heal, there's a time the F and the D really gives you the opportunity to harvest and to be passive and to be whatever it is that you want him to do in this season of life without having to force yourself not to be the other one. Because some of our clients do have kids that are between the ages of 10 and 18. Right. And now it's like, well, I want to maximize my summers of my time and my energy coaching my kids, and I don't want to deal with my properties, my business right now. But once they're 18, and they're off and gone, we'll probably get back in the game again, and really like you know, build wealth and do the things. And so the DST gives you that chance to hit pause, pause for those crucial years with your kids and your family without having to, you know, be forced to not have to be able to do those things in the future. Right. So the DSP can go in and out of liquid and illiquid investments, you can set different time horizons for different amounts of money. And hopefully feeling great and diversified because our eggs are in one basket, you're not having to have debt in your name. I mean, there are just, we call them the 12 freedoms in the DST, right? There's partnership freedom, 1031 freedom, estate tax freedom, diversification freedom, liquidity freedom, and when you start adding these things up. And that's the neat part. With the DST, you can literally do all of them. But usually it's two to three that really are the hot buttons for our clients. When it clicks, they go, Oh, it solves that, that that will transform my wealth, plan my life and my energy. Because this product is versatile and powerful. Which is also why it's not as well known because it's not easy to execute, right? We think it's simple, but it's not easy, right? In the sense that it does take a team to take expertise. It does take getting to know us, like us, trust us, understand our clients, you know who our clients are. But we have all of that. And we work on a conditional basis. We're in a fight, though it's a fight for the 84 trillion of wealth, it's transferring from the baby boomers and to the next generation in the next 20 years. And the question becomes will it be in the hands of the people with flexible strategies like this or be the hands of the government was probably going to waste away pretty quickly. So we also see our higher purpose is to make an impact for the freedom of America. And it's like the reverse tea party right? From the beginning to enter 40 plus years ago, it was fighting for representation on taxation. Now we've built the most amount of wealth in the history of the planet that we know of out of any other country. And now it's transferring it and it's during that transfer its most vulnerable.
All right to tax. And so to be on the front lines to help to solve some of this 84 trillion can make all the difference. And what does that mean? We want to invest into multifamily housing and the housing crisis, right? We want to help to create more jobs with the money by creating more business ventures. But the money that is stuck in what would call, capital gains tax jail, is stuck in 1031 jail, it just has to buy investment property. That's where it becomes so rigid, right. But if you can develop right with the capital, multifamily property, if you can start new companies, if you can fund ventures that are going to change the fabric of America, that's the key, right, and this is 84 trillion that is going to be taxed. And so solving that and becoming that bridge between the two is the key to us for you know, the fight for freedom.
Mike Stohler
Yeah, I mean, it's 100%. I absolutely agree with that. Before we wrap up, is there anything that I've missed that you'd like to talk to our listeners about?
Brett Swarts
You know, I just would say, don't put off today, what you're feeling like is the next best move for you and your family, right? And don't trade what's unique to you for something someone else can do. COVID has taught us one thing in particular, and all my family is that time is short on this earth. And in fact, 85% of the time that we have with our kids is before they're 18. What that meant for us is we moved out of California to Florida, and we established residency in St. Augustine, Florida, and we're traveling we're spending trying to spend 1000 days in 100 unique locations with our kids. Before they're 18 we homeschool our kids, which is pretty flexible. We do jujitsu and soccer, we travel to different places, I'm taking my daughter to Costa Rica coming up here in a week or a one on one time that we could have together making memories. And so I would just say don't let the capital gains tax hold you back from the things that you want to be doing could be doing shouldn't be doing.
Get started. Now build a plan, connect with us, we're here to help you out. And we would love the opportunity to serve anybody. Here's some minimum requirements real fast, a million dollar net proceeds and a million dollar game. So it's gonna be a big enough transaction to qualify. But it literally works for any asset of any kind. It can be crypto, business, real estate, give me stock public or private. So it's any asset of any kind, as long as it's a million dollar net proceeds million dollar gain. If it's big enough, you qualify. We also only get paid as it closes. But you need to set this up prior to closing, right unless you're doing the best 1031 exit plan. And then we could save your 1031. But get this early so that you have the option. Okay, if you wait too long, and too long means you've closed escrow and the money's in your account. Or if the buyer has moved all contingencies, it's too late. It's over. Unless you use the best 1031 plan because you have investment real estate then you can use the DST as a backup plan. So yeah, go to capitalgainstaxsolutions.com. And the last thing is we have expert tax secrets if your business professional commercial estate operator syndicator, financial advisor, CPA, and you're saying Brett, I really resonate with everything you're saying. And I want to learn more. And I want to become more of an expert in this field than we have our coaching program in our mastermind to help you get hands on coaching right in consultation to help you build out a way to roll this out to your clients. So that's experttaxsecrets.com for that.
Mike Stohler
Thank you so much, Brett, for coming on. And congratulations on getting out of California. Moving to beautiful Florida. That's a beautiful state we love, we love Florida. We appreciate you coming on. We hope you have a wonderful day everybody again, Brett Swarts, really good meet. Look it up, go on his website, grab his book on Amazon. And don't make the mistakes that I've done in Washington, exchanges and just distress, destress it a little bit. Get on his website. Take his classes. Brett. It's been wonderful. Thank you so much for coming on The Richer Geek Podcast.
Brett Swarts
I appreciate you. Thank you so much for having me.
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ABOUT BRETT SWARTS
Brett Swarts is a renowned Capital Gains Tax Deferral Expert, Founder of Capital Gains Tax Solutions, and an exclusive Deferred Sales Trust Trustee. He hosts the Capital Gains Tax Solutions podcast and serves as an eXp Commercial Multifamily Broker in Sacramento, CA, and Saint Augustine, FL. With over $500,000,000 in closed commercial real estate brokerage and Deferred Sales Trust transactions, Brett assists millionaire clients in creating tax-deferred exit wealth plans using The Deferred Sales Trust. He is passionate about educating high net worth individuals on capital gains tax deferral strategies and freeing them from feeling hostage to capital gains tax or a 1031 exchange. Brett resides in Sacramento, California, with his wife, Melanie, and their five children.