Deferred Sales Trust

Avoiding Selling Your Hotel Due to Capital Gains Taxes?

Deferred Sales Trust May Be The Answer.

Jan. 21, 2020

 

4 Options When You Sell Your Hotel

4 Options for Capital Gains When You Sell Your Hotel

 

If you own a hotel, you have two options: hold or sell. If you sell your hotel, you have three options: pay capital gains tax, defer capital gains tax using a 1031 exchange to purchase a new hotel, or defer capital gains taxes using a Deferred Sales Trust (DST). 

 

With a Deferred Sales Trust, you can avoid paying any capital gains taxes at the time of sale. Instead, you will receive the sale proceeds in installment payments over a predetermined period, typically 10 or 20 years or over your lifetime. The payment schedule is flexible, and you can also defer initial payments if you don’t need the income. Capital gains taxes will be due on installment payments as you receive them. Meanwhile, the Trust invests the entire sale proceeds (pre-tax) in stocks, bonds, real estate, annuities, or any other type of investment at your direction and approval. You can let your deferred taxes earn you income. 

 

A Deferred Sales Trust is a two-part sale. Before closing on the sale to the identified buyer, you sell your hotel to a third-party trust in an installment contract which would pay you the sale proceeds in installment payments over a predetermined period. The trust would then sell the hotel to the buyer as a regular asset sale.

 

Benefits:

  • Decrease or eliminate capital gains taxes.
  • Alternative to 1031 Exchange.
  • Earn returns on investment from pre-tax sale proceeds.
  • Flexible payment options: rapid or minimal repayment options, immediate or delayed.
  • Liquidity and Diversification: convert an illiquid asset, like real estate, into a diversified portfolio of liquid investments.
  • Enhanced Retirement Income: sale proceeds paid in installments can provide a steady stream of income in retirement. Plus, earn returns on investments.
  • Ownership group/ partnership parties do not have to invest together. Individual owners can have their own Deferred Sales Trust to manage investments according to their individual risk tolerance and preferences.

 

Property Sale Scenario with Deferred Sales Trust

 

Safety Track Record:

  • The tax attorney and CPA Todd Campbell of Campbell Law has transacted over 2,500 transactions valued at $3 billion.
  • Historically low audit rate over a 20-year period, and no negative outcomes or changes have resulted.
  • Campbell Law will represent a client (you) in an audit at no cost.
  • Campbell Law works closely with the seller’s attorney and/ or accountant to ensure the transaction is done properly.
  • Documents are first drafted, but no fee is incurred unless the client and their counsel approve and decide to move ahead.
  • Heirs avoid inheritance tax and probate.

 

Meet a Trustee for the Deferred Sales Trust

 

Jordan E. Kanter, JD

Jordan Kanter

Managing Member, Victory Financial Services, LLC

 

Jordan E. Kanter, JD has presided over thousands of tax deferred transactions without a negative outcome. He is a respected authority on tax deferral strategies and is one of the few experts in the country on both 1031 Exchanges and the Deferred Sales Trust™. He has been a fiduciary to high net worth clients for over twenty-five years, with extensive experience as an attorney, qualified intermediary, trustee and, formerly, a securities and insurance advisor.

 

Click Here for a Free Consultation with Jordan Kanter.

 

Click Here For A Brochure

 

'Til Next Time, 

 

Charlie Fritsch

President MBA Hotel Brokers Inc. and President Hotel Investor Apps Inc. 

 

and

 

Jaime Goss

Marketing Director MBA Hotel Brokers Inc. 


 

MBA Capital Funding Inc. is a commercial mortgage and financing services firm, specializing in arranging debt and debt structures.